The global economy could be stuck in a weak growth rut for a long time as countries struggle to pull free from a past of high debt and unemployment, the head of the International Monetary Fund said on Thursday.
The economic rebound is even weaker than the IMF predicted six months ago, and countries risk getting bound to a prolonged period of sluggish growth, especially in the euro zone, IMF managing director Christine Lagarde said.
"Yes, there is a recovery but as we all know - and can all feel it - the level of growth and jobs is simply not good enough," Ms Lagarde said, according to prepared remarks at Georgetown University in Washington.
“The world needs to aim higher and try harder.”
Ms Lagarde also warned about financial risks, as asset valuations in advanced economies have shot up while volatility stays low, and more risky transactions start to migrate to the shadow banking sector. And geopolitical risks could also derail the recovery, she said.
She called on policymakers to do more to boost economic growth and create jobs, including reforming labor market policies and investing in infrastructure.
“Our main job now is to help the global economy shift gears and overcome what has been so far a disappointing recovery: one that is brittle, uneven, and beset by risk,” Ms Lagarde said.
“It means a mix of bolder policies to inject a ‘new momentum’ that can overcome this ‘new mediocre’ that clouds the future.”
Reuters
