IMF chief urges bold action to tackle crisis

Reuters News
Posted: Sep 15, 2011 10:10 AM
IMF chief urges bold action to tackle crisis

WASHINGTON (Reuters) - The head of the International Monetary Fund on Thursday urged advanced countries to take bold action to break a vicious cycle of weak growth and high debt that threatens the global economy and has been worsened by dysfunctional politics.

"Without collective, bold action, there is a real risk that the major economies slip back instead of moving forward," IMF Managing Director Christine Lagarde said in a speech ahead of IMF and World Bank meetings next week.

She said global growth was slowing, with advanced economies facing an "anemic and bumpy recovery." In contrast, emerging economies faced overheating pressures with rising inflation, strong credit growth and expanding current account deficits.

Lagarde said timid economic growth and weak public balance sheets in developed nations were feeding negatively on each other, fueling a crisis of confidence and restraining demand, investment and employment.

"This vicious cycle is gaining momentum and, frankly, it has been exacerbated by policy indecision and political dysfunction," Lagarde said.

(Editing by Andrea Ricci)