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
    +2

    Comment number 33.

    "Its all about confidence - All this constant doom and gloom makes it a self-fulfiling prophesy. "

    One of the lingering myths spread by the media is that it is 'all about confidence'. This makes what is happening seem magical and impenetrable and blocks discussion. In reality, it is about real things like the gigantic costs imposed by economic parasitism.

  • rate this
    +1

    Comment number 32.

    Hang on - so on one hand she doesn't want investment in emerging markets to dry up but on the other she is saying don't bother because it's too risky

  • rate this
    +2

    Comment number 31.

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

    Yes we do don't we so why are you in your capacity as head of the IMF not doing anything other than talking about it?

  • rate this
    +1

    Comment number 30.

    The best action to restore confidence is to shut down the IMF and form an organisation which operates in the interest of the people not the banks.

  • rate this
    +17

    Comment number 29.

    Is this the same IMF who were totally oblivious to what was going on prior to the initial financial crisis and are constantly updating their forecasts as they are wrong every time.

    You might as well ask Mystic Meg.

  • rate this
    +2

    Comment number 28.

    "warned the global economic crisis has started to hurt growth in emerging economies"
    Thats what happens when no one in the 'emerged' nations can afford anything - going on holiday, buying goods, giving to charity - gone

  • rate this
    +3

    Comment number 27.

    Sustainability

  • rate this
    +2

    Comment number 26.

    I agree with comment 20. Urban_Monk

    Its all about confidence - All this constant doom and gloom makes it a self-fulfiling prophesy.

    Can we not be positive for once & dare I say it muzzle Christine Legard to stop her spouting negativity?

  • rate this
    0

    Comment number 25.

    23.Athame57
    3 Minutes ago
    I never realised this was news!

    its not. Ms Lagarde just wante to get infront of the tv cameras as she has been out of circulation for a while.

  • rate this
    +3

    Comment number 24.

    9.Megan - "Has the IMF actually got any suggestions as to how to promote.....recovery?......."


    Yes. Decode the economic jargon in to plain English & what she has said is:

    Too much austerity is making things worse, borrow a bit more then invest it wisely as you're going to keep borrowing more anyway - the Coalition has already forced the deficit up to it's HIGHEST ever monthly levels...

  • rate this
    +2

    Comment number 23.

    I never realised this was news!

  • rate this
    +2

    Comment number 22.

    15.JapanBBCfan

    I would suggest if the pie were share around more equally there would be plenty to go around.

    As it is we have a massive inequality imbalance creating those with capital ability to speculate on rising food and commodity prices while the most people starve having to pay higher prices.

    Tipping point has reached for example real demand for Crude collapsing.

  • rate this
    +2

    Comment number 21.

    Blueyes2 has got a point. Politicians are treating their economies like a never ending credit card, just piling more and more debt without thinking how it's going to be paid for. Bankers are just encouraging them as any "loans" are funded by sovereign assets that will be repossessed when loans are defaulted. Politicians are helping the bankers to get rich while squeezing their electorate.

  • rate this
    +5

    Comment number 20.

    Lagarde is very irritating...seems to give out unneccessary new warnings each day. Yes Christine we all know we're in a global recession..and your regular negative comments are not helping the situation...maybe she should be restricted to 1 update a month, although that would be too much for me! Confidence is the key!

  • rate this
    +2

    Comment number 19.

    In the good times, we bought cheaply manufactured products from the emerging countries. now that we are cutting back, of course some imports will drop. Possibly not all will suffer though. I'm sure the Bangladeshi and Indonesian sweatshops are working overtime now that hard up shoppers are turning from the likes of M&S to Primark.

  • rate this
    +2

    Comment number 18.

    this is no big surprise. the emerging nations are trying to be capitalist in the economy and yet have learnt little from the west. greed will eventually fail, because only a very few benefit.

    Wonder how much Ms Lagarde gets paid for stating the obvious?

  • rate this
    0

    Comment number 17.

    Yikes, we must be an emerging nation because it is sure hurting !

    Maybe Christine should start wearing sack cloth rather than Chanel, it would be more appropriate in these austere times

  • rate this
    0

    Comment number 16.

    Is it time to fully nationalise Banks and privatise the losses. Any and all profits can then be use to benefit the nations in strife.

  • rate this
    +2

    Comment number 15.

    What we have discovered since the 1970s and the exponential growth of developing nations is that there really is a limit to the pie. European states in particular supported much of their welfare structure on the easy assumption of income from exports to less developed nations. No longer. These nations are now the exporters, but not yet consumers. The system is entirely out of balance

  • rate this
    +4

    Comment number 14.

    IIMF simply look after their own Bankers they dont think about social implications country in trouble.

    So many times IMF has gone into a country and looted for the Bankers.

    The IMF sprout on about only way solve Greek crisis is internal devaluation ie let the People suffer but not the Bankers

    The Capitalist system fundamentally flawed choosing protect capital rather than people

 

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