IMF chief warns over slowing global growth
International Monetary Fund chief Christine Lagarde Friday warned the
global economy was slowing and said the situation could get worse
because Europe was not doing enough to fix its debt crisis.
Lagarde said the IMF would cut its growth forecast in its global
outlook to be released later this month.
"What I can tell you is that it will be tilted to the downside and
certainly lower than the forecast that was published three months ago,"
she told an economic forum in Tokyo during a week-long Asian tour.
"And that is predicated on the right set of actions being taken in
Europe in order to avoid very significant deterioration and to eliminate
major threats." In April, the IMF hiked its global growth forecasts to
an annual rate of 3.5 percent this year, accelerating to 4.1 percent in
2013, up from the January forecast of 3.3 percent and 4.0 percent
respectively.
Lagarde declined to elaborate on the IMF's new assessment due later
this month, but said conditions since the last forecast had
"regrettably" become "more worrisome", although she hailed recent steps
to tackle Europe's woes.
The IMF chief cited measures adopted after a European leaders'
meeting in Brussels last week and the European Central Bank's move on
Thursday to cut interest rates to historic lows as proof of progress.
Stimulus measures and emergency aid to troubled Italy and Spain were
"significant steps in the right direction", Lagarde said.
But "from the IMF perspective, we believe that more needs to be done
in order to really complete the architectural job of the eurozone: a
monetary union, a banking union followed by a fiscal union". "It's also
a question of implementation -- diligent, rigorous, steady
implementation," Lagarde added.
On Thursday, central banks in Europe and China ushered in easing and
stimulus moves in a bid to help power the global economy, just days
after the IMF pared its growth forecast for the US economy.
The Washington-based organisation estimated 2012 US economic growth
at 2.0 percent, down from an April forecast of a 2.1 percent expansion
for the world's biggest economy -- and warned that the Obama
administration may be slicing the deficit too fast for the weak economy.
Lagarde's comments came a day after Beijing's second interest rate
cut in less than a month surprised markets and stoked worries about the
world's second-biggest economy.
Then, the European Central Bank cut its main interest rate to a
record low 0.75 percent, while the Bank of England kept its rate even
but announced 50 billion pounds ($78 billion) in additional stimulus.
Lagarde applauded Asian nations, particularly China, for turning
their focus away from depending on exports to measures that boost demand
at home, adding that the "rebalancing that came with the crisis
shouldn't go with the crisis".
She also acknowledged that the yen was "moderately overvalued" after
Prime Minister Yoshihiko Noda told her earlier Friday that Japan's
economy was "suffering a serious, adverse impact" over the currency's
strength.
The Japanese unit hit record highs against the dollar last year, and
remains strong as traders eye safe-haven currencies amid worries about
the euro and greenback. |