Global economy is losing momentum and governments should take action to preserve the recovery, Christine Lagarde, the chief of the International Monetary Fund (IMF), has cautioned. “The recovery remains too slow, too fragile,” she said at Frankfurt on Tuesday.
Advanced economies still face a hangover from the global financial crisis of 2007-2009 in terms of too much debt, low investment, and, for some, high unemployment.
A stronger dollar has weighed on growth in the United States, while China’s economy has slowed.
She said the global outlook for the next six months had weakened, suggesting that IMF may be revising its forecasts. The speech sets the stage for the IMF and World Bank meetings in Washington later this month. In January, the IMF forecast global growth of 3.4 percent this year. Lagarde urged governments to take pro-growth reforms and to increase spending on public infrastructure.
Mediocre growth that doesn’t help ordinary people much risks political backlash that “has consequences for the social and political fabric in many countries,” she said.
She warned against turning to protectionism favouring domestic producers in competition with foreign firms as a response. “The answer to the reality of our interconnected worth is not fragmentation, it is cooperation,” she said.
