IMF's Christine Lagarde says crisis hurting emerging nations

 
Euro sign The eurozone crisis has hurt global economic sentiment and growth

The International Monetary Fund (IMF) head, Christine Lagarde, has warned the global economic crisis has started to hurt growth in emerging economies.

She said that uncertainty surrounding the global economy was hampering policymakers' ability to take measures to boost growth.

Earlier this week, the IMF warned that the global economic recovery was getting weaker.

The fund has also cut its global growth forecast amid the ongoing crisis.

Separately, the World Bank has cut its forecast for major Asian economies, including China and India, citing global risks.

"Whether you turn to Europe, to the United States of America, to other places as well, there is a level of uncertainty that is hampering decision makers from investing, from creating jobs," Ms Lagarde said during a press conference in Tokyo.

"We need action to lift the veil of uncertainty."

Delayed recovery?

One of the key concerns among policymakers across the globe has been the ongoing debt crisis in the eurozone and its impact on global growth.

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The world is still a scary place, but for the Fund - and for governments - scary is becoming all too normal. The more normal it seems, the less scope there may be for the IMF to make much of a difference. ”

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The crisis has dented consumer confidence in the region and hurt growth in the bloc's economies.

That has already had an impact on demand for exports from Asia to the region, hurting growth in export-dependent countries such as China, Japan and South Korea.

Ms Lagarde, who was speaking in Tokyo on the eve of the annual joint meeting of the IMF and the World Bank, said that while eurozone policymakers had taken measures to allay fears about the crisis worsening, a fast recovery was not on the cards.

"Good news is the fact that this European Stability Mechanism that had been discussed and in the making for the last months has now been christened," she said.

"In terms of speed, the bad news is that for it to actually operate there will be a legislative and often parliamentary process for the fund to effectively work."

Closer ties

The meeting is taking place at a time of increased political tensions between Asia's two biggest economies, China and Japan.

Relations between the two have deteriorated in recent weeks after Japan said it had purchased a set of disputed islands in the East China Sea, which are claimed by both the countries as well as Taiwan.

Lagarde: "We hope that differences, however long-standing, can be resolved"

The islands lie in important shipping lanes and fishing grounds and also close to waters thought to contain natural resources.

Japan's announcement of its purchase of the islands in September had sparked a diplomatic row and led to anti-Japan protests in China.

On Wednesday, the governor of China's central bank pulled out of the IMF and World Bank meetings.

The country's finance minister is also unlikely to go, as state media said that Vice-Minister Zhu Guangyao would attend.

Ms Lagarde called upon the two nations to resolve their differences.

"All economic players and partners in this region are very critical for the global economy," she said.

"We hope that differences, however long-standing, can be resolved harmoniously and expeditiously so that from an economic point of view the co-operation can continue and can be beneficial not only to those countries... but also to the global economy."

 

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  • rate this
    +1

    Comment number 13.

    In fariness, she might not want to give the tried and tested method of exiting these extreme economic problems.

    History has shown the best way to solve those economic woes is a good old fashioned war centred on Europe.

  • rate this
    +1

    Comment number 12.

    time to rid ourselves of this fake money system and the greed it has spawned, go local CL GETS TO MUCH DEBT REstructuring fees and that is all this about defranchising the common person, one big contrick the deficit to be repayed will just grow and grow

  • rate this
    -1

    Comment number 11.

    #10 and get rid of previous imf leaders they dont fancy,by making up a story about them.

  • rate this
    +7

    Comment number 10.

    I had forgotten what the role of the IMF was. Now I remember - it's to trot around the globe, staying in 5* hotels, stating the obvious.

    It's a tough job but someone has to do it.

  • rate this
    +4

    Comment number 9.

    Has the IMF actually got any suggestions as to how to promote economic recovery?

    We know the global economy is a mess but no government has a clue as to how to address it, our vacuous bunch being as clueless as everyone else. Just adding to the negativity does not help: we need someone with ideas!

  • rate this
    +1

    Comment number 8.

    I would agree with 'Blueyes 2' but the debt based financial system we have does not or ever will work. There will never be enough money to pay the outstanding debts of today and I suspect collapse of the existing system is only a matter of time. A new banking system is required that does not allow fractional leveraging. Credit unions should be licensed so that they can provide banking services.

  • rate this
    +1

    Comment number 7.

    Just to Blueeyes2, well all money is created as a debt--yes, it is. Sad fact. So everything in our world is in fact debt-fueled. It's pretty stupid and didn't have to be like this. anyway we're stuck with it for now and money isn't really explained in school. All humans tend to over-consume. Even people who are saving are actually using more than they realize if we include air, water, sewage

  • rate this
    +6

    Comment number 6.

    Nice of the IMF to advise

    Perhaps someone ought to suggest to IMF that we need to let Banks Go Bust and then the eonomy would recover

    Opps that would mean many Bankers left holding the Bag of Worthless Paper

    I feel another round of Bank Bailouts is just around the corner.

    Stand up People and this time say No Why Should Banker Be Bailed Out Yet Again

  • rate this
    +4

    Comment number 5.

    Wow! This woman is really sharp eh?

  • rate this
    +7

    Comment number 4.

    This crisis has a long way to run. There appears to be a sense of desperation in the expectation that policy makers and central banks can solve the problems. The eurozone will not get its act together and there is a fiscal crisis in the USA drawing ever closer.
    Growth will be too weak to avoid these issues so it is hard to see any light at the end of the tunnel.

  • rate this
    +8

    Comment number 3.

    How much is she paid to state the obvious?

  • rate this
    +12

    Comment number 2.

    What the heck did these politicians expect!? The West saw manufacturing go 'East' as labour was cheap. West filled the void with credit stimulating service industry. Credit fed by surplus funds from East due to exports. Nations became inter-reliant, yet, striving for domestic supremacy that thwarted this 'equilibrium' on long-term! Game theory in play!

  • rate this
    0

    Comment number 1.

    In Europe many people including the politicians are still in denial that there is a problem they feel they can continue spending money they do not have borrowing more and more to support a lifestyle that is not sustainable. The Asian boom having been built on people spending money they have borrowed is also not sustainable. What is needed is a dose of reality - lifestyles of many have to change

 

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