Next six months critical to quell crisis: IMF's Shafik

Sun Oct 14, 2012 6:02am EDT
 
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By Lesley Wroughton

TOKYO (Reuters) - Meetings of global financial chiefs over the weekend ended with a clearer picture of what Europe, the United States and emerging countries need to do to prevent a deep downturn in the world economy, a senior IMF official said on Sunday.

IMF Deputy Managing Director Nemat "Minouche" Shafik told Reuters the next six months were critical for governments to act.

"The challenge now is the politics of implementation," Shafik said in an interview. "That is the same challenge in Europe, in the U.S. and in emerging markets."

The meetings of the International Monetary Fund and World Bank sounded a clear warning that world growth was slowing under the weight of substantial economic uncertainties.

The uncertainty stems from how quickly European leaders will act to authorize a bond-buying scheme by European Central Bank and whether the United States will overcome political divides to avoid a "fiscal cliff" of higher taxes and deep government spending cuts at the start of next year.

The coming 12 months are also rife with political questions whose answers will determine whether economic commitments to address the crisis will be kept.

Germany goes to the polls next year, while U.S. presidential elections and a once-a-decade leadership change in China are weeks away. European Parliament elections take place in June 2014.

"There are political windows of opportunity in every country at some point of time," Shafik said. "Because we know what needs to be done, when those political windows of opportunity open, policymakers need to jump through them very quickly and have those measures ready."   Continued...