IMF chief warns of slowing global growth

Friday 06 July 2012 08.22
Speaking in Tokyo, Christine Lagarde welcomed recent EU / ECB moves but said "more needs to be done"
Speaking in Tokyo, Christine Lagarde welcomed recent EU / ECB moves but said "more needs to be done"

IMF chief Christine Lagarde has warned that the global economy is slowing.

Speaking in Tokyo, she said a soon-to-be published growth outlook would be lower than earlier forecasts.

"What I can tell you is that it will be tilted to the downside and certainly lower than the forecast published three months ago," she said.

In April, the IMF hiked its global growth forecasts to an annual rate of 3.5% this year, accelerating to 4.1% in 2013.

That figure was up from the January forecast of 3.3% and 4% respectively.

Lagarde, declined to elaborate on its upgraded assessment due later this month.

She said, however, that the outlook since the last IMF forecast had "regrettably" become "more worrisome".

The IMF had said its improved global forecast in April was due in part to better global financial conditions and easing fears about the eurozone debt crisis.

"The outlook for the global economy is slowly improving again but is still very fragile," it said at the time.

On Tuesday, the Washington-based IMF cut its growth forecast for the US economy and warned that the Obama administration could be slicing the deficit too fast for the weak economy.

The IMF estimated 2012 US economic growth at 2%, down from an April forecast of a 2.1% expansion for the world's biggest economy.

Lagarde welcomes EU / ECB moves

Christine Lagarde welcomed recent "significant steps" to contain the euro zone crisis but warned that "more needs to be done".

Lagarde 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.

But "from the IMF perspective, we believe that more needs to be done in order to complete (the reform)".

"It's also a question of implementation; diligent, rigourous, steady implementation," she told an economic symposium in the Japanese capital during a week-long Asian tour.

Stimulus measures and emergency aid to troubled Italy and Spain, which EU leaders agreed on following the Brussels talks, were "significant steps in the right direction to address the immediate crisis, which is encouraging", Lagarde said.

On Thursday, central banks in Europe and China ushered in easing and stimulus in a bid to help power the global economy.

Keywords: imf