 Well good afternoon everyone, I'm Jerry Rice of the IMF. We're delighted to welcome you here today for the launch of our World Economic Outlook update. In just a second I will leave it to our economic councillor, Marie Obstfeld, to my right to introduce the wheel update as we call it. And he will be supported by the Deputy Director of the Research Department, that's Gianmaria Melesi Ferretti. But immediately I would like to introduce the Managing Director of the IMF, Madame Christine Lagarde, who will make some opening remarks on this World Economic Outlook update. Thank you Madame Lagarde. Well thank you very much Jerry, and welcome to all of you and thank you for being here with us today. This is actually the first time that the International Monetary Fund presents its midterm outlook on the occasion of the World Economic Forum. And I want to thank Claude Straub for hosting us on this occasion. It also gives us the pleasure of seeing all of you, which wouldn't be the case if we were currently in Washington. I will be very happy to introduce in a minute Maurice Obstfeld, who actually needs no introduction. And he and his team will walk us through their findings for the update of the World Economic Outlook. But I want to give you just a few words of introduction, just to give you the landscape as we see it at the moment. Global growth has been accelerating since 2016, and all signs point to a continuous strengthening of that growth this year in 2018 and next year in 2019. So this is very welcome news. And being here and having arrived to the media center in the middle of the snow, we might all think of the words by William Blake in the winter and joy. But we believe that this would be a mistake and that complacency is actually one of the risks that we should guard against. We certainly should feel encouraged by the strengthened growth, but we should not feel satisfied. Now, why is that? First of all, there are still too many people who are left out of that recovery and acceleration of growth. In fact, about one-fifth of emerging and developing countries saw their per capita income decline in 2017. Second reason why we should not feel entirely satisfied is that this is clearly a cyclical, mostly a cyclical recovery. And absent continuous reforms, the fundamental forces that had us so much worried about this new mediocre that we feared. In other words, the scars from the crisis, the low productivity, the aging population and on and on, and future potential growth. All of that will continue to weigh on medium-term prospects. Third reason why we should not be entirely satisfied, there are uncertainty in the year ahead. The long period of low interest rates has led to a build-up of potentially serious financial sector vulnerability. And we are seeing a troubling increase in debt across many countries and we need to remain watchful. Now, you will say this is the responsibility of the IMF to constantly see the potential downside risks even down the road if not in the immediate short term. And yes, it is our responsibility. It doesn't change the fact that we are quite upbeat for the immediate future. But what we are seeing in the more medium term gives us ground for worry. Now, I did say at the October annual meeting that quoting John Fitzgerald Kennedy that it's when the sun is shining that you want to repair the roof. I will not venture there today, but it's clearly when the snow stops that here they clear the roads. And the same analogy works. It's a perfect opportunity actually now for the world leaders to repair their roof. And the theme of this year's annual meeting of the World Economic Forum, creating a shared future in a fractured world, clearly demonstrates that. Let me outline three areas where I believe that the sharing has a meaning. First of all, shared growth. We think that policymakers should use these very circumstances to make the difficult structural and fiscal reforms that might not happen otherwise or that were too difficult in times of hardship. And that means taking steps to boost long term growth, paying down debt in places where it's too high and in other places investing back into the economy through infrastructure and effective social spending. Now, why is it shared, you will say, because sharing begins by mending your own turf. Second, shared opportunity. We will hear plenty about that in the course of this week. Growth, in our view, needs to be more inclusive. Not only across country, which has occurred over the course of the last few decades, but within countries. And some areas of focus in our view require training for workers that are displaced or at risk of being displaced by new technologies and globalization. We need those new opportunities for workers at risk. We need new opportunities for young people. And we need new opportunities for women as well, and them being included safely in the workplace. Finally, sharing is about global responsibilities. We need robust international cooperation if we are going to tackle shared problems. And that includes fighting corruption, improving the international trading system, tackling tax evasion, addressing climate change issues, and on and on. So while we should certainly appreciate this season and the good news that we have, we should also certainly focus on the measures that are needed today for long-lasting solutions in order to have that better shared future. With that, I'm very honored to turn the floor over to Mori, who will present to you in details their findings and the update. And I will sit very diligently and listening attentively to what he has to say, and then I'll disappear. Mori, over to you. Thank you very much, managing director. Good afternoon, everyone. The honor is ours to have you introduce this press conference, which is very exceptional. So everyone should know that. This is not how we usually do it. And I'm also going to thank Jerry Rice, who's our director of communications, who will be organizing the questions, and John Maria Melezzi-Feretti, who's deputy director of our research department. And as it won't come as a surprise that my remarks will echo a number of the things the managing director has just said. As the year 2018 begins, the world economy is gathering speed. Our New World Economic Outlook update revises our forecast for the world economy's growth for both 2018 and 2019 to 3.9 percent. This is true for both years, and for both years, this is 0.2 percentage point higher than last October's forecast. And it's also 0.2 percentage point higher than our current estimate of 2017 global growth. This is very good news. But, and the IMF always has a but, political leaders and policymakers must stay mindful that the present economic momentum reflects a confluence of factors that is unlikely to last for long. The global financial crisis may seem firmly behind us, but without prompt action to address structural growth impediments, enhance the inclusiveness of growth, and build policy buffers and resilience, the next downturn will come sooner, and it will be harder to fight. Every government should be asking itself three questions today. First, how can we raise economic efficiency and output levels over the long term? Second, how can we support resilience and inclusiveness while reducing the likelihood that the current upswing ends in an abrupt slowdown or even in a new crisis? And third, how can we be sure to have the policy tools we will need to counter the next downturn? Looking first at where we are now, we at the Fund see the world economy as follows. The primary sources of GDP acceleration so far have been in Europe and Asia, with improved performance also in the U.S., Canada, and some large emerging markets, notably Brazil and Russia, both of which were actually shrinking in 2016, and also in Turkey. Much of the momentum will carry through into the near term. The recent U.S. tax legislation will contribute noticeably to U.S. growth over the next few years, largely because of the temporary, exceptional investment incentives that it offers. These short-term growth booths will have positive, albeit short-lived, output spillovers for U.S. trade partners, but will also likely widen the U.S. current account deficit, strengthen the dollar somewhat, and affect international investment flows. Trade is again growing faster than global output, driven in part by higher global investment, and commodity prices have moved up, benefiting those countries that depend on commodity exports. Even as economies return to full employment, inflation pressures remain contained and nominal wage growth remains subdued. Financial conditions are quite easy, with booming equity markets, low long-term government yields and borrowing costs, compressed corporate borrowing spreads, and attractive borrowing terms for emerging market and developing economies. How do we explain the current upturn? Well, it did not arise by chance. It began to take hold in the middle of 2016, roughly, and owes much to accommodative macroeconomic policies, which supported market sentiment and hastened natural healing processes. Monetary policy has long been and remains accommodative in the largest countries, underpinning the current easy global financial conditions. Even though the U.S. Federal Reserve continues to raise interest rates gradually, it has been cautious, having wisely responded to the turbulence of early 2016 by postponing previously expected rate hikes. The ECB has started to taper its large-scale asset purchases, which have played a critical role in reviving euro area growth, but has also signaled that interest rate increases are a more distant prospect. Moreover, fiscal policy in advanced economies has on balance shifted from contractionary to roughly neutral over the past few years, while China has provided considerable fiscal support since its growth slowed in mid-decade with important positive spillovers to its trade partners. In the U.S., of course, fiscal policy is now poised to take a markedly expansionary turn with complex effects on the world economy. Our view, however, is that the current upturn, while welcome, is unlikely to become a new normal and faces medium-term downside hazards that likely will grow over time. We see several reasons, to some extent reflected in our medium-term growth projections, to doubt the durability of the current momentum. First of all, advanced economies are leading the upswing, but once their output gaps close, they will return to longer-term growth rates that we still expect to be well below pre-crisis rates. While we project advanced economy growth of 2.3 percent in 2018, our assessment of the group's longer-term potential growth is only about two-thirds as high. Demographic change and lower productivity growth pose obvious challenges, and these call for major investments in people and research. Fuel exporters face especially bleak prospects and must find ways to diversify their economies. A second reason we think this is not a new normal is that the two biggest national economies driving current and near-term future growth are predictably headed for slower growth. China contributes the bulk of global growth and it will both cut back the fiscal stimulus of the last couple of years and, in line with the stated intentions of its authorities, reign in credit growth to strengthen its over-extended financial system. And consistent with these plans, the country's ongoing and necessary rebalancing process implies lower future growth. As for the other big driver of global growth, the United States, whatever output impact its tax cut will have on an economy so close to full employment will be paid back partially later in the form of lower growth as temporary spending incentives, notably for investment, expire, and as increasing federal debt takes a toll over time. Thirdly, as important as they have been to the recovery, easy financial conditions and fiscal support have also left the legacy of debt, government and in some cases corporate and household debt, in advanced and emerging economies alike. Inflation and interest rates, it is true, remain low for now, but a sudden rise from current levels, perhaps due to pro-cyclical policy developments, would tighten financial conditions globally and prompt markets to reevaluate debt sustainability in some cases. Elevated equity prices would also be vulnerable, raising the risk of disruptive asset price adjustments. Fourthly, despite rising growth in Europe, Asia, and North America, there is less good news in the Middle East and sub-Saharan Africa, the last area weighed down by the weakness of its larger economies. Low growth, driven in part by adverse weather effects and sometimes combined with civil strife, has sparked significant outward migrations. Improvements in some large Latin American economies are notable, but aggregate growth in the region will be weighed down this year by continuing economic collapse in Venezuela. Finally, and fifthly, even though the recovery has lifted employment and aggregate income from crisis lows, voters in many advanced economies have soured on political establishments, doubting their ability to deliver broadly shared growth in the face of tepid real wage gains, reduced labor shares in national income, and rising job polarization. A turn to more nationalistic or authoritarian governance models, however, could result in stalled economic reforms at home and a withdrawal from cross-border economic integration. Both developments would harm longer-term growth prospects to the detriment of those who have already fallen behind over the past few decades. Levels of inequality are high in emerging markets and low-income economies as well, and there too carry the seeds of eventual future disruptions unless growth can be made more inclusive. This situation creates challenges for policymakers. Perhaps the overarching risk at the moment is complacency. While the current conjuncture might appear to be a sweet spot for the global economy, prudent policymakers must look beyond the near term. No matter how tempting it is to sit back and enjoy the sunshine, policy can and should move to strengthen this recovery. Now is the time to build policy buffers, reinforce defenses against financial instability, and invest in structural reforms, productive infrastructure, and people. And I stress the people. The next recession may be closer than we think, and the ammunition with which to combat it is much more limited than a decade ago, notably because public debts are also much higher. An upswing so broad also furnishes an ideal moment to act on a range of multilateral challenges. These include countering global financial stability threats, including cyber threats, strengthening the multilateral trading system, cooperating on international tax policy including the fight against money laundering, and promoting sustainable development in low-income economies. Of especially urgent importance is to fight irreversible environmental damage, notably from climate change. With that, I'll turn it over to Jerry. Well, thank you very much, Maury. Thank you very much, Madame Lagarde. We'll now turn to your questions in the room. Just to mention, you have the WIO update, the document. We will release Maury's remarks to you, we're doing that now, and we will release Madame Lagarde's remarks to you as well. So we have a large audience here in the room, we have a very large audience online, and we'll turn to your questions if you could keep them as short as possible, and please recognize, identify yourself by name and affiliation. Thank you. Let's start here with Bloomberg. Thank you. Thank you very much. End of current from Bloomberg News. I wonder if you mentioned that the overarching risk is complacency. You mentioned we might be closer to a recession than we think. It's hard to identify one risk as the biggest, because I think all are quite worrisome and they also interact. And so I think policy makers really need to think broadly, comprehensively, and for the long term, not just over the next political cycle, which is sometimes hard for them. You know, as an example, I flag the lower long term growth rates. These are part and parcel of the sort of political dissatisfaction I think we've been seeing in many economies, particularly as the fruits of growth have been quite unequally distributed, and in some countries increasingly so. Financial stability, how we regulate the financial sector is also not disconnected with concerns about inequality. So I think pushing on one priority would probably do a disservice to the challenge that policy makers face. They really need a broad approach, one that is very comprehensive. Okay. Just maybe taking the lady in the second row here. Second row. Thank you. Alicia Contale from Alpais. You mentioned specifically Spain in the report, and you reduced the perspectives for this year because of political uncertainty, but you rise it for next year. So must I assume that you believe the political uncertainty will finish or that we will have any other stimulus of any kind? Thank you. Yeah. Well, we're certainly hopeful that the political situation and the uncertainty that it causes will diminish, and that while this is an internal matter for Spain, that within the laws of the country some way to move forward will be reached. You know, for the coming, for the current year's forecast we did do a downgrade. Now this reflects some uncertainty from the Catalonia situation coupled with some optimism because there is growth in the eurozone and this will benefit Spain, and we expect that momentum to carry over into 2019. You know, Spain is now benefiting. I mean, the growth has been above 3% for several years now. It's benefiting from past reforms. We think that pace is not quite sustainable, but we do see healthy growth for the next couple of years. I don't know if John Maria wants to add to that. No, I would just mention that the external environment is clearly helpful because we are forecasting a strong recovery in the euro area, including for 2019. So that supports Spanish exports. Thank you very much. Okay. Just moving over. Lady in the third row. Yes, ma'am. Sandra from Tencent. Two questions. First of all, China actually has been the growth engine during the 2008 financial crisis. Right now it has been 10 years from there, and you just mentioned China goes through its rebalancing process. So what will China place right now compared to 10 years ago? And the second one is, let's say this year, let's say if fat will raise rates the same pace as last year. Do you worry it's going to have more pressure on the emerging market? Thank you. Yeah. You know, China, of course, carried out a very large fiscal stimulus at the time of the crisis. This was a strong support not only for Chinese growth, but for global growth. And even though China's growth rate has come down, given its size in the world economy, given its relatively high growth rate, it is still a major source of growth. You know, there are certainly challenges which the leadership has recognized in terms of strengthening further financial regulations, strengthening further hard-budget constraints on state-owned enterprises, strengthening the relationship between local and federal budgets. So there are challenges there, but we see China as a strong driver of global growth going forward. As far as the Fed is concerned, we will expect them to look at the situation in the U.S. and make data-dependent decisions to attain their mandate, which is full employment, stable prices. I think the communication over the last couple of years has been particularly good. The adjustment has been gradual. This has not overly stressed the emerging markets, and our baseline would be for that to continue. Thank you. Okay, just swinging around on the front row, gentlemen. Hi. My name is Alec Hogg from businessnews.com. Quite a lot of the last little while to do with geopolitics. We've seen Southern Africa some dramatic changes in the political situation there. Are you reading like Goldman Sachs does, which in the weekend said that South Africa is their top emerging market for 2018. Have you worked any of that into your calculations? Yeah, I mean basically these update numbers predate what has been going on in South Africa, these very recent developments. And so we will have more of that in our spring numbers when we issue the World Economic Outlook, but we have not fully incorporated those very recent developments. I think we have to wait and see how this works out. Okay. Lady in the front row, too. Thank you. Ivana Kotosova, CNN. You mentioned that tax policies in the U.S. will have impact on growth globally, attributing about half of that upgrade to the tax policies. Do you expect the same to happen after 2022? Is the U.S. growth going to become a drug on the global growth because of the tax policies and the slowdown that you expect there? I should preface this by saying that the tax bill and its impact is quite complex and there is a lot of uncertainty around our estimates. Given that some of the features of the tax bill are explicitly temporary, we do expect there to be some payback. For example, temporary expensing of investment should give a surge of investment in the near term, but when that stops, there will be some payback of that. On the other hand, some of the features, the cut in corporate tax, the move to a territorial system, are not temporary. We also incorporate in our forecast the PAYGO provisions which would require cuts in government expenditure going forward as the deficit grows. Hard to say whether those will be adhered to or relaxed. So there's certainly some potential for the payback in U.S. growth to result in slower import growth in the U.S. which would affect trading partners. That's somewhat symmetric with what's happening in the current years, but how big those effects would be, you know, how the overall picture would look is very hard to predict. Thank you, Mark. Probably time for a couple more. Gentlemen, the second row here. Yes, sir. Thank you. It's Stephen Fiddler from the Wall Street Journal. When you talk about repairing the roof, are you also suggesting that the Eurozone nations should enact structural reforms to increase risk sharing such as deposit insurance and a common fiscal policy among them? And a quick second one is, do you see any risk, systemic risk in Bitcoin and cryptocurrencies? You know, in Europe, a number of European countries over the last few years have enacted important structural reforms. I mentioned Spain a few years back. The Jobs Act in Italy. President Macron's plans for France are quite ambitious. But it would be fair to say that a much broader push incorporating even more nations would benefit the Eurozone countries and the EU generally. Now, that's not an architectural issue. That's something every country has to do on its own. As far as the architectural issues are concerned, we certainly promote a completion of the banking union, the structures that have been created, the single supervisory mechanism, the single resolution mechanism. Our great steps forward, but more can be done. For example, in the area of deposit insurance, we also would like to see more in the way of a central fiscal capacity. So part of the project of fixing the roof is certainly to enhance and improve the architecture of the Eurozone. You know, on Bitcoin, we don't like to comment on specific cryptocurrencies. You know, from the sort of blockchain technology in general, we see possible advantages in terms of the efficiency of payment systems and inclusion. It's an interesting development. We also see that cryptocurrencies could offer risks. And it's going to be important for regulators to be watching very carefully to make sure that the risks don't materialize. Thank you very much, Maureen. Yes, lady in the back, bro. Yes, ma'am. Thank you, Helena Humphrey, Deutsche Welle. Berlin is growth in itself, not an outdated concept or measurement when we're seeing the benefits of the last cycle filter through to fewer and fewer people. Yeah. You know, I think there are two aspects of your question. One aspect is, you know, is GDP the right way to look at welfare? And there I would argue, you know, certainly no, but it's probably better than all the other ways that have been suggested. But it clearly, it clearly leaves out a lot. And to the extent we can improve our measurement of what the economy produces, both positively and negatively. The economy also produces climate damage and that is not measured in GDP, although in principle we could do that. So that's sort of one issue. The other issue is GDP is an aggregate. It is the aggregate of what a country produces. But it doesn't measure the distribution of the rewards from producing that. That is something one could do, but it would require a value judgment. You would have to wait the, you know, the deservingness of the poor versus the rich. An economist have kind of struggled with this for centuries actually. This is not something that's a new idea. How do you measure overall utility? But it would require a value judgment and therefore different people would disagree about how to do it. So we think you have to keep GDP as an anchor and where it doesn't get at all of the social or welfare issues that you want to discuss, then you supplement it with other data. It's probably never going to be possible to produce one single number that, you know, somehow summarizes the happiness of the totality of people in the world. But I think GDP is a key concept and we'll keep looking at it. Thank you very much. Maybe just take the one last question here, gentlemen. Thank you. Cameron from China's Slight Further Moderation of China's Economic Outlook in 2018. We would like to know, will China continue to play a bigger role? Well, you know, China has indeed come to play a much bigger role in global governance and coordination. You know, obviously as a member of the G20, it's the IMF's third biggest shareholder. It has now entered the SDR. So, you know, there's no question that China is a major, major player. You know, as I mentioned, Chinese growth just quantitatively is incredibly important to world growth. So, it's going to be important for China to, you know, to play its role in supporting the multilateral system, judging from President Xi's comments here in Davos last year. It's very eager to do that. That will require, you know, I think, further steps from China to also open its own economy to imports and work on a range of issues. Everyone is going to have to contribute to make the multilateral system work better. And China's role is critical. Thank you very much, Mori. You know, you'll have a chance to hear more from Mori over the next day or so here in Davos and, of course, Madam Lagarde. I just want to thank you, thank him, thank John Maria, Madam Lagarde and thanks to all of you for coming along today. We'll see you in the course of the next few days.