IMF chief Christine Lagarde warns global situation is 'more worrisome'
INTERNATIONAL Monetary Fund chief Christine Lagarde has warned that the global economic situation has become "more worrisome".
Speaking in Japan ahead of talks with prime minister Yoshihiko Noda, the managing director of the IMF said a cooperative policy response is now needed more than ever.
"Over the past few months, the outlook has, regrettably, become more worrisome," Ms Lagarde said. "This is a global crisis. In today's interconnected world, we can no longer afford to look only at what goes on within our national borders. This crisis does not recognize borders."
Japan and the Asian region have coped with the crisis well so far, contributing more than half of total global growth since 2008. However, "this does not mean that Asia is immune. The spillovers from Europe are increasingly visible here," Ms Lagarde said.
The fund's next growth forecasts, published on July 16, are likely to be lower than the fund's previous forecasts, she added.
The IMF chief said that while developments in Europe remain the most pressing risk for the global economy, she was encouraged by last month's EU summit in Brussels, where "European leaders agreed to significant steps in the right direction to address the immediate crisis".
However, she stressed that "further progress will continue to be needed to overcome the crisis decisively and avoid the damaging effects on stability and growth".
Turning to Japan, she said the country's economy is at risk from a further appreciation of the yen, caused by a flight away from riskier assets in Europe.
This was a view echoed by Mr Noda, who claimed that the debt problems in Europe were causing "severe damage" to Japanese economic sentiment.
With the IMF-World Bank Annual Meetings taking place in Tokyo this October, Ms Lagarde was quick to praise the relationship. "When the global economy faced its darkest hours, you stood by your fellow global citizens," she said, adding that Japan had been the "first to offer loans to boost the IMF's resources and help stave off an even more dire global economic collapse".