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 153.

    When are we going to be brave enough to call out the fact that raw capitalism doesn't work. You cannot have a global monetary system that takes from the many and distributes to the few.
    We shouldn't be printing more money, we should be implementing a new global asset rule limiting how much individuals can hold. Ie: £1bn
    Beyond this, income/earning should be redistributed back into the economy.

  • rate this

    Comment number 152.

    Former Treasury Sec. Lawrence Summers (1999-2001) provides his perspective of the so-called "fiscal cliff" and offers an economic strategy for the next decade

    This is the guy to listen to:-

  • rate this

    Comment number 151.

    The IMF can advise all the like, the government only cherry picks the bits that support their politics and ignors and plays down the rest. The problem is that policians with no economic qualifications are using their political minds to make economic decisions.

  • rate this

    Comment number 150.

    It's hard not to roll one's eyes when reading the analysis regularly pumped out by the IMF. Do we need an army of PhDs in DC to churn out this obvious tosh?

    May I propose my own economic analysis (using "Virginia School" public choice theory)? - The IMF is a rent-seeking bureaucracy that churns out mediocre economic analysis while presenting itself as essential to global economic health.

  • rate this

    Comment number 149.

    This isnt a crisis anymore. It is the new normal.

    Any idea that we will return to what we became used to, after 'the crisis' has passed.... I dont think so!

    Lots of civil unrest awaits us, in my humble opinion.

  • rate this

    Comment number 148.

    It's over. What we need now is quantum leap of imagination, not idiots telling us they want more of our money to sustain the unsustainable.

  • rate this

    Comment number 147.

    This is what happens when money is king.There is a something for nothing culture with the well off too.How many have made their money by dint of hard work?Anyone can make money by upping prices and firing staff.When the rich avoid taxes or put their money in taxshelters this is'nt wealth creation.Squeezing the poor who do the spending,and making goods no-one will buy won't help growth either.

  • rate this

    Comment number 146.

    Now we are facing Mitt Romney, the Bain Capital King of breaking up companies, getting rid of the workers & selling off the assets after consuming the retirement accounts of the workers or anything else not nailed down
    Does he seriously think he can win the Presidency & do the same thing to U$A?
    I think his goal is to be the first elder to create the Mormon Utopia
    Out of what's left of the USA!

  • rate this

    Comment number 145.

    we need higher fuel bills, so we can all spend more in the shops and create jobs...duh..

  • rate this

    Comment number 144.

    Jay has a point - The stock market will only trade companies that make a set % more profits every year, they have been making more & more money and when they had to cut staff, they cut staff
    Now they have to cut ?
    Here is where the Corps turned predatory on the workers they have and started taking away their benefits and demanding more work for less pay
    next they turned to our 401K's thanks to GWB

  • rate this

    Comment number 143.

    mr kay 40
    the last time the western world had levels of relative govt debt higher than today was after ww2
    this preceded an unprecednted 3 decade steady growth
    and real improvements in living conditions of the majority
    austerity is caused by cutting fiscal[govt ]stimulus during
    a private sector recession
    prosperity is achieved by increasing it

  • rate this

    Comment number 142.

    Lagarde is part of the problem.

    Ever since the first Bretton Woods gathering bankers have been trying to take advantage of others who produce things.

    Lagarde should be aware of this. Instead she tries to regularise things so that bankers can carry on ripping the system.

    Blame bankers or Lagarde?

    In a cruel twist of fate the producers, non bankers, get the blame.

    And Lagarde allows it to be so

  • rate this

    Comment number 141.

    The Middle Class workers who are close to retirement are going to suffer more that most. Their long years of investment into their retirement accounts that were gambled away by the Banks calculus Credit Default Swap ponzie scheme have less time to recover
    The 55 & younger who Romney will dole out Vouchers to instead of the Social Security Fund they paid in to most of their working lives suffer

  • rate this

    Comment number 140.

    The chasm between to Rich "Elite" who have power over politicians
    and the Middle Class & poor who have NO representation by the politicians who owe their careers to the "Elite" is so obvious it's stupid

    When it changes is up in the air, never if Romney wins
    Next year if Obama wins

    It really is that simple

    U$ voters will choose what the world will become

    Because the US economy is the best!

  • rate this

    Comment number 139.

    You can not keep on milking a cow, expect it to give more milk each successive financial quarters while decreasing even on its minimal diet. Neither economic nor political stability can be achieved by increasing wealth concentration in fewer hands; consolidation of industries in every sector; killing opportunity, competition & innovation among less privileged population & small/medium industries.

  • rate this

    Comment number 138.

    Countries have found it so easy to borrow, generating further debt that until countries take the tough decisions to resolve their debt issues there is very little hope of recovery. Countries like the UK, happy to see manufacturing shift abroad and become totally reliant on other countries to provide most of their consumer goods, have little hope of recovery. Export not import.

  • rate this

    Comment number 137.

    There is only one way out of this mess
    Stop the calculus Credit Default Swaps
    Separate the Investment and Deposits of banks
    Break the Big Banks down to ........
    therein lies the problem
    it's the banks profits that are a lie so the investors did not really make any money on their investments

    The rich do not want to loose their profits so you have to suck up their loss!
    You, Middle class workers!

  • rate this

    Comment number 136.

    What the Germans have done seem sensible to me.
    Why should the Brits borrow money to buy things they don't need and can't afford in order to make bankers rich?
    Why do we teach some students French and quadradic equations when they can barely speak English and count with their fingers?
    They should learn a trade.

  • rate this

    Comment number 135.

    All policies - low interest rates, QE, funding for lending etc have the effect of encouraging spending rather than saving. This is exactly the wrong signal to send.

    Emergency measures were rightly introduced after Lehman but the medicine becomes less and less effective on a long term basis. It will be painful but it's time to gradually "normalise" monetary policy.

  • rate this

    Comment number 134.

    25% UNEMPLOYMENT IN GREECE RISING TO 54% if your young.
    the world looks a lot grimmer and dangerous.
    World War two solved the last great depression.
    if you destroy everything and kill off millions upon millions of people the economy will go through the roof for decades to come.


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