IMF's Lagarde: Uncertainty Slows Global Recovery | WAMU 88.5 - American University Radio
Filed Under:

IMF's Lagarde: Uncertainty Slows Global Recovery

Play associated audio

Managing Director of the International Monetary Fund Christine Lagarde says recent actions by the European Central Bank mark a positive turning point in Europe's financial crisis. But she warned that uncertainty elsewhere will continue to slow the pace of the global recovery.

Back in July, the IMF was forecasting world growth of just under 4 percent for next year. The group's economists will issue a new forecast in a couple of weeks. Lagarde said the new projection still foresees a gradual recovery, but it will shave a few tenths of a percent off global growth.

Lagarde said a number of factors are eroding growth. "At the center of them we clearly see uncertainty — uncertainty about what policymakers can and will deliver on their promises," she said.

But Lagarde, who spoke at the Peterson Institute for International Economics in Washington, D.C., congratulated one set of policymakers. Central bankers, she said, have played a key role. In fact, in recent weeks the central banks of the United States, Japan and the European Union have announced new programs to inject hundreds of billions of dollars into their struggling economies. Lagarde said they were sending big policy signals in the right direction.

"They point the way forward and they create an opportunity to build on what has already been done, an opportunity to make a decisive turn in the crisis," she said.

Lagarde singled out the European Central Bank's unlimited bond buying program announced earlier this month as a turning point in the euro crisis. It's aimed at lowering borrowing costs for countries like Spain and Italy. The ECB announcement clearly calmed the financial markets and drove borrowing costs down dramatically.

Jacob Kirkegaard, a Europe specialist at the Peterson Institute, says surveys show the ECB's big move has helped reduce the threat of the euro crisis on the radar screens of investors.

"In fact, the U.S. fiscal cliff in some of these surveys has now overtaken the euro crisis as sort of the single issue that concerns investors the most," Kirkegaard said.

Lagarde called the fiscal cliff — the massive increase in taxes and spending cuts scheduled for Jan. 1 — a serious threat to the U.S. and the global economies. She said the world hopes political clarity would emerge in the U.S. soon.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

NPR

How To Sell Diverse Books: A Bookstore Owner's Advice

It's not news that the publishing world isn't very diverse. But over on the other side of the industry, how do owners of neighborhood bookstores try to sell books for or about people of color?
NPR

Can Quinoa Take Root On The 'Roof Of The World'?

Quinoa, once a homebody crop, crossed the Atlantic for the first time this century. Now the Food and Agriculture Organization has a hunch it can thrive in Central and Southwest Asia.
NPR

Senate Control May Swing On North Carolina's Unpopularity Contest

Democratic incumbent Kay Hagan wants voters to punish her GOP challenger Thom Tillis, the speaker of the state House, for unpopular laws. Tillis wants to aim anger toward the president at Hagan.
NPR

Islamic State Uses Online Strategies To Get Its Message Out

Experts say the videotaped killing of journalist James Foley is part of a broader propaganda strategy by Islamist militants. The group, the Islamic State, has become a master of the video medium.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.