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IMF Chief Says Global Growth Remains Subdued

IMF Chief Says Global Growth Remains Subdued

International Monetary Fund Chief Christine Lagarde said global economic growth remains subdued despite signs of recovery taking hold in the U.S., emphasizing the point that economies are moving at different speeds.

The stake of U.S. in the global recovery is greater than ever in a world of increasing economic interconnections, Lagarde said in a speech to business leaders at the U.S. Chamber of Commerce in Washington, D.C on Thursday.

Ahead of the release of the next World Economic Outlook on October 8, she underscored the interplay between the global economy and the U.S. economy and the importance of job creation.

In the previous WEO report published in July, the global growth projection for 2013 was trimmed to 3.1 percent from 3.3 percent.

Lagarde said growth in the U.S. will be below 2 percent this year and it should accelerate by a full percentage point next year, with the private sector playing a key role as the engine of growth and job creation.

While the U.S. economy and the euro area are growing, the emerging market economies are slowing. "For some, this may be a shift toward more balanced and sustainable growth," she said.

Further, she pointed out that job creation is a critical component for any economic recovery and policymakers should help to shape the environment in which businesses can thrive. Lagarde also highlighted the necessity to find joint solutions to develop balanced and shared global recovery.

Lagarde warned of the repercussion of the political uncertainty over the U.S. budget and its debt ceiling. "It is essential to resolve this, and the earlier the better for confidence, for markets and for the real economy," she said.

Further, she advised the U.S. to exit the unconventional monetary policy in a gradual manner, linking the exit to progress in economic recovery and unemployment.

by RTT Staff Writer

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