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

    Comment number 53.

    @52. You don't need to save for your university course. You pay it back once you're working. If they only earn 16k they won't even need to pay the 'loan' back

  • rate this

    Comment number 52.

    If people only spent the money they had...When I was young I would save up to buy something …
    I would love to hear your explanation of how school leavers would ‘save’ for their university course, or how people could save up to for a business start-up, or even save up to pay for a house.

    Especially as the average wage is £16k pa.
    Your version of economics DOES NOT WORK.

  • rate this

    Comment number 51.

    @47 Well said!

    It is time to press the reset button. This is the latest in a series of reminders that year-on-year growth cannot continue forever. One day it will have to stop, and stop completely. The resources of plant Earth cannot support it - they will run out.

    At least if we have a rethink now there will be some resources left to work with.

    Sadly it will not happen.

  • rate this

    Comment number 50.

    These are the same people encouraging govts to invoke right wing policies under the guise of austerity (what they actually mean is clobber the poor). They should all be pursuing one policy only: creating conditions towards full employment: the deficits(and social issues) take care of themselves. The IMF is probably the one institution that could make this happen but is devoid of strong leadership.

  • rate this

    Comment number 49.

    No7 Des. If people only spent the money they had the world economy would not be in this mess. When I was young I would save up to buy something but today people want things now they do not save up their money they just borrow it and soon they are in a debt spiral. Your income does not always increase year on year which is the basis that underpins the just borrow the money culture

  • rate this

    Comment number 48.

    The International Maffia Federation (IMF) has been sucking dry developing nations giving them loans they could either not repay or bankrupt themselves. It is time to get rid of the IMF and their cronies, crooked bankers and financiers.

  • rate this

    Comment number 47.

    Bottom line here is that growth in developed economies is effectively over.Developing nations will follow shortly.Economics as a discipline has only existed in the last 200 years during fossil fuel enabled times of exponential growth.This is not sustainable and so neither is ever rising GDP, population, globalisation and consumerism.Leaders like Legarde need to wake up to reality and do the maths.

  • rate this

    Comment number 46.

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

    Surely this is what policy makers are paid for. If it was easy wouldn't anyone be able to do it?

    The current climate is not just hard for 'Policymakers' in their ivory towers and million pound houses, it's hard for everyone!!!

  • rate this

    Comment number 45.

    ---just eliminate debt. Financial institutions, who 'make' money through debt, would lose out but everyone else would benefit.---

    Please just make sure you let me know before this happens. I want to get my life savings and pension plans out of the institutions that are going to go bankrupt before it happens!

  • rate this

    Comment number 44.

    Remember she is a friend of Gideon, and look how well his policies are working? There is a lack of leadership in the World Financial bodies - they are only in it for themselves, and have no coherent plan - they flip flop from one theory to another, look at the Bank of England - leaderless, and as long as we continue to revere such people the mess will go on. Put David Blanchflower in charge now.

  • rate this

    Comment number 43.

    I view life as a train journey .... with most of it in the light of open space but some parts in dark tunnels. Eventually we leave the gloom of each tunnel and re-enter the light.
    We have been in many dark tunnels financially since 2008 and the tunnels are getting closer and longer.
    And I think this railway line eventually will run over the edge of a cliff.
    The rich will survive the wreckage.

  • rate this

    Comment number 42.

    Does she really get paid for stating the bleeding obvious?

  • rate this

    Comment number 41.

    OK, IMF: if you have no ideas to contribute try this one - declare a Jubilee - all debts (personal, commercial and national) paid in full, then start over, just sustainably this time. If debt is causing the problem and efforts to reduce it holding back growth... just eliminate debt. Financial institutions, who 'make' money through debt, would lose out but everyone else would benefit.

  • rate this

    Comment number 40.

    Simple answer.. Debt is causing the problem. It needs paying off. That means harsh decisions including cutting aid budgets,welfare benefits, public sector costs, war spending, earnings expectations etc in all nations of the "developed" world. And these debt levels must never happen again !
    If we don't then this crisis will go on for the next decade..or two..or three..!!

  • rate this

    Comment number 39.

    The IMF is akin to the world’s biggest pawn shop servicing struggling nation states.

    If you are a struggling nation state be aware that what you pawn you lose if you cannot redeem the ticket.

    That would be fine if it is something that you can afford to do without.

    Problem though is that it never tends to be things that you can afford to do without.

  • rate this

    Comment number 38.

    The economic conundrum

    One the One hand IMf days We need more growth and gov who can should borrow

    However If gov gets into trouble as Many govs have VIA saving the capitalist system, the IMF Will Come in and force austerity to ensure banks get paid back but expense of citizens in country.

    We need to dismantle current ideology as it is clearly not working.

  • rate this

    Comment number 37.

    People like Legarde are the reason we are in this mess. To get out of it we need to tear up the EU regulations that stop business developing, stop listening to these 'economists' from the BoE, IMF, stop bailing out failed banks. Cut business and personal taxes to get things moving. Which hotel are they all staying in in Tokyo? Age of austerity? Unless you have a posh job at the IMF or EU.

  • rate this

    Comment number 36.

    Fresh Crisis?.... Surely it's a continuation of the one that began in 2008 by American Bankers!

  • rate this

    Comment number 35.

    what does she know?
    we know that the uk is recovering, cameron told us at the tory self praise meeting.
    maybe he should point this out to christine .... as surely he wouldnt tell us porkies

  • rate this

    Comment number 34.

    wow so good at talking about it.. heres a great new idea , , how about DOING SOMETHING ABOUT IT'!!!!!!


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