The International Monetary Fund’s Managing Director was speaking ahead of next week’s IMF-World Bank Spring Meetings in Washington, which bring together finance ministers and central bank governors to discuss the issues currently causing global concern.

Lagarde painted a fairly upbeat picture of the global economy overall, ahead of the release of new global growth forecasts next week. But she warned darker clouds are looming and that now is the time for policymakers to take action, even paraphrasing a passage from JFK’s 1962 State of the Union speech, by saying "the time to fix the roof is while the sun is still shining."

Protectionist Policies

Lagarde went on to outline three areas where she thinks policymakers can make a difference. The first being protectionism. She said history has shown that “import restrictions hurt everyone, especially poorer consumers,” and that the open trade system is now “in danger of being torn apart.” And this is an “inexcusable, collective policy failure,” she added.

Although she didn’t specifically mention the U.S. or China, this was undoubtedly a reference to the recent tariffs the world's two biggest economies have imposed on each other’s goods. Last month, in an interview with French radio station RTL, Lagarde said there are no winners in a so-called trade war. And that was a sentiment she chose to echo throughout this speech. When pushed further in the question and answer session that followed, she referred to the threats and counter-threats but said the only real way to address the situation is through dialogue.

Lagarde suggested there are other ways for the U.S. to address macroeconomic global imbalances. She said that gradually curbing the dynamics of its public spending and increasing revenues would in turn help to reduce future fiscal deficits.

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