IMF chief ramps up call for global action as growth risks increase

Tue Apr 5, 2016 6:59am EDT
 
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By Francesco Canepa and Frank Siebelt

FRANKFURT (Reuters) - The global economy's already modest prospects will decline further unless authorities take stronger action to boost growth, the head of the IMF warned on Tuesday, saying the Fund would cut its headline forecasts next week.

Christine Lagarde said China's shift to an economic model based more on domestic demand, stubbornly low commodity prices and tighter funding conditions in some countries had all clouded the outlook.

"Let me be clear: we are on alert, not alarm. There has been a loss of growth momentum," the International Monetary Fund's managing director said in a speech at Frankfurt's Goethe University.

The recovery from the 2007-2009 global financial crisis "remains too slow, too fragile and risks to its durability are increasing."

But if policymakers confronted the challenges and acted together, "the positive effects on global confidence -- and the global economy -- will be substantial."

Lagarde advised the United States to raise its minimum wage, Europe to improve job training and emerging economies to cut fuel subsidies and boost social spending.

She gave her strongest hint yet that the IMF will cut its global economic forecasts next week.

"The global outlook has weakened further over the last six months so you can (deduce) from that there will be a slight revision (in the IMF estimates)," Lagarde said.   Continued...

 
IMF Managing Director Christine Lagarde attends a news conference after a seminar on the international financial architecture in Paris, France, March 31, 2016. REUTERS/Jacky Naegelen