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 133.

    Time has come to rethink the strategies to implement globalization and put the interest of common people first than big businesses and influential people. Currently, globalization created more poverty and income inequality both 1st & 3rd world. The difference btwn both rich & poor in India or China with its US/EU counterpart decreased, but difference increased among rich & poor within the country.

  • rate this

    Comment number 132.

    If only the Justice Dept & the IRS would go after the big tax evaders they could get some $'s for the coffers, instead they go after the little guys cause they can't afford a lawyer

    Upside down world of insanity

    The Rich get a bigger share as the poor die off from overwhelming stress from trying to feed 5 mouths for the price of one and living in the streets

    & Romney Shape Shifts yet again!!!!

  • rate this

    Comment number 131.

    I have been saying this..all along!

    I have always said it was a world crisis: & a world crisis it is. And I gave nearly the whole true scenario of events since 2006, the way they have turned out to be in my comments to you the BBC & to New York Times & & CNN & Al Jazeera etc. & I said all along this recession is a "Depression". Germany could now be heading into it's own "Recession".

  • rate this

    Comment number 130.

    So much speculation, so much talk, and yet so little in the way of possible solutions being offered. Must be a great job to travel the world stating the obvious!!

  • rate this

    Comment number 129.

    Austerity slows down an economy? Isn't that what Obama has been saying all along
    Congress, no one believed him & now everyone is saying we have to spend to get out of this mess
    The GOP are determined to continue looting here in the U$A
    Now the IMF say they are wrong & Romney must Shape Shift again!
    There is no way he can get away with shape shifting all the time
    he's confusing himself
    He's a joke!

  • rate this

    Comment number 128.

    Let’s face it the GB financial “deficit” is a joke, and shouldn’t be anywhere near the figure that it is.

    Leaked Treasury Figures in 2006 estimated the Tax gap caused by Tax Avoidance and Tax Evasion as being between £97 and £150 billion. It’s about time these people were bought to book instead of keep cutting benefits.

  • rate this

    Comment number 127.

    IMF and other players such as World Bank have usually been backing austerity measures to the point where it tells countries to sell some islands to pay for your debt, sell nationalised services such as water, . . . When it looks like the countries really are going to default (after a looting operation??) it suddenly does a u-turn and states that austerity measures can slow down the economy!?

  • rate this

    Comment number 126.

    Why do we pay these "experts" vast amounts of money only to come out and state what was obvious to everyone. To have growth you not only need a manufacturing economy but buyers too. What happens after a financial crisis is people stop spending, without people spending the market shrinks and without markets companies cut jobs. Economic confidence is lost and people stop spending even more.

  • rate this

    Comment number 125.

    I read back in 2007 when 'recession started' Britain was in just as much trouble as PIIGS countries but our debt rollover only kicks in 2013, we're nearly there. IMO we are are being held hostage by banks and their control over money. See:

    “The Largest Heist in History”

    This was accepted as evidence and published by House of Commons, Treasury Committee

  • rate this

    Comment number 124.

    Agreed there is a lot of debt right now.
    Agreed there is no fossil fuel on Moon / Mars.
    Energy production need not be confined to burning fossil fuels.
    Comets could be harvested for their water content. Not everything needs to be metallic to be worth collecting.

  • rate this

    Comment number 123.

    "Did you think that space/land was not a resource? Would you now like to rethink your position?"

    It is a resource and it is uniquely fixed in position so that its ownership excludes alternatives / competition; this fact has political and economic consequences. However, the fact that land is finite in extent does not place a limit on the *use* that can be made of land

  • rate this

    Comment number 122.

    #121 Philip C

    In fairness he does make as much sense as Legarde

  • rate this

    Comment number 121.


    Are you smoking something? Given current levels of debt how are we supposed to afford colonising the moon & mars? There's no coal or fossil fuels on either and as for harvesting comets I think you'll find that they are mostly rock and ice. What exactly are we supposed to be mining from them?

  • rate this

    Comment number 120.

    I hope IMF gets involved in some thing better.Instead of giving warnings about things and gets involved in finding the solutions to the problems.

  • rate this

    Comment number 119.

    World Crisis phase III ....

  • rate this

    Comment number 118.

    #116 ‘The economy crashes repeatedly because space and locations cannot be made and production needs them.’

    #100 ‘If any part of the system has a limit then the system as a whole has a limit. … Therefore there IS a limit to growth.’

    Did you think that space/land was not a resource? Would you now like to rethink your position?

  • rate this

    Comment number 117.

    We need to stop wasting money on wars and start a serious forward looking plan to colonise the Moon and Mars. We need the pioneers to land within 10-15 years, with full colonisation within 100-150 years.
    We need to start harvesting the nearby asteroids and comets etc for their worth also. Whilst this is happening we need to revert this planet population to sustainable levels.

  • rate this

    Comment number 116.

    "everyone is trying to figure out what is behind that calculus that was sold in the form of Mortgage Assets that were not really assets"

    The price of standing still, the cost of empty space; the land value.

    The economy crashes repeatedly because space and locations cannot be made and production needs them. People use this fact to garner wealth without producing anything in return

  • rate this

    Comment number 115.

    I really don't understand what Governments will do, apart from shuffle the cards and make matters worse by taking their salaries.
    Cost of Government against GDP in most countries now is too high.
    Stop talking and reduce unrealistic Government salaries and pensions. Increase manufacturing in those countries who have let it slip. You have to produce something tangible, not ideas.

  • rate this

    Comment number 114.

    To me it's time for a Global Currency Reset. With many emerging country's trying to find there place in the world economy (Iraq, Vietnam, etc) it's time to ReValue there currency! I'm sure there's other country's that need to Revalue there currency in the positive direction or DeValue there currency to make sure they have the assets to back there currency! Go World RV!!!


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