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Tuesday, April 3, 2012

IMF Lagarde: ‘We should not delude ourselves into a false sense of security’

Lagarde said today the world economy is still in recession and the recovery remains fragile.
Lagarde said today the world economy is still in recession and the recovery remains fragile.
Lagarde said today the world economy is still in recession and the recovery remains fragile.
IMF Managing Director Christine Lagarde said today the world economy is still in recession and the recovery remains fragile as she warned that, although some progress has been made, the global economic situation is not ideal yet.

“We should not delude ourselves into a false sense of security,” she alerted.

Lagarde stressed some heavy aspects of the recession are still hovering over the world’s road to recovery. “The recovery is still very fragile. The financial system in Europe is still under heavy strain. Debt is still too high, public and private. Stubbornly high unemployment is straining the seams of society. Rising oil prices have the potential to do a lot of damage.”

She also warned about the risk of contagion on a globalized economic as she highlighted the historical importance of the recession.

“These are trying times. The global economy is trying to emerge from the deepest and most painful economic crisis since the Great Depression. At the same time, the world is growing smaller and more interconnected by the day, meaning that economic disruption in one country can touch people all across the globe,” she said in a speech to the Associated Press Annual Meeting in Washington, DC.

The Managing Director remarked, however, the overall outlook has improved. "It's fair to say that things are looking a bit better than they did even a few months ago.”

However, Lagarde said policymakers should not become complacent and must "use the breathing space to finish the job." To boost growth, countries should make use of monetary policy, especially with no real signs of inflation in advanced economies, she said.

She also urged the United States to tackle its high public debt levels, currently exceeding 100 percent of gross domestic product. "The country needs a stronger push to fix its public finances in the years ahead, including by curbing the growth of entitlement spending and raising more revenue," Lagarde added.

The IMF views the unemployment’s rate also as a main concern on the road to economic recovery. “Noting that over 200 million people globally, including nearly 13 million in the US, are without work, she said, “jobs must be a priority.”

She also made an appeal for more IMF resources. “Now that the Europeans have moved first with their firewall, the time has come to increase our firepower,” she said.

The IMF is a good investment for all its 187 member countries, including the United States, she said, adding that no member country has ever lost money by contributing to IMF resources.

 

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Tags:  Lagarde  IMF  world economy  debt crisis  EU  US  





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