IMF and World Bank warn on double-dip recession
The heads of the two international lending agencies last night issued stark warnings about the state of the global economy.
The president of the World Bank, Robert Zoellick, and the head of the International Monetary Fund, Christine Lagarde, separately warned that the world economy was on the brink of disaster.
Speaking as political leaders and financial officials gathered in Washington for a series of discussions on the state of the economy, Mr Zoellick said the world was edging closer to a "double-dip recession".
He warned that emerging economies like China and Brazil were now at risk of being sucked into the crisis that was already gripping Europe and the US.
"I still think a double-dip recession for the world's major economies is unlikely, but my confidence in that is being eroded daily by the steady drip of difficult economic news.
"A crisis made in the developed world could become a crisis for developing countries. Europe, Japan and the United States must act to address their big economic problems before they become bigger problems for the rest of the world. Not to do so is irresponsible."
Meanwhile, Ms Lagarde kept up pressure on the European Central Bank to act as the main prop in supporting European banks while countries tried to tackle their budget crisis.
The ECB must continue to provide "solid, reliable" funding for banks and economies, Ms Lagarde said at a press conference.
She said investors needed to "allow the time for democracy" in euro countries that need to approve changes to the bailout mechanism agreed upon by leaders in July.
US Treasury Secretary Timothy Geithner issued another warning. "The two clouds still over us are the European crisis and the deep concern that you can see across the world and around the US about whether the political system in the United States is up to the challenges we face," he said.
Japan's finance minister Jun Azumi also called on Europe to end the crisis and said Japan might consider further support if Europe gave clear direction on how to rescue Greece.
"Europe first needs to solve its problems by itself," he added.