Global recovery is continuing but it remains too slow and fragile and the risks to its sustainability are rising, International Monetary Fund Managing Director Christine Lagarde said Tuesday.
"The recovery remains too slow, too fragile, and risks to its durability are increasing," Lagarde said in a speech in Frankfurt.
The persistent low growth can self-reinforce itself through negative effects on potential output that can be hard to reverse, she warned. The risk of becoming trapped in the so-called "new mediocre" has increased, the IMF Chief added.
"We are on alert, not alarm. There has been a loss of growth momentum," Lagarde said.
"However, if policymakers can confront the challenges, and act together, the positive effects on global confidence—and the global economy—will be substantial."
The global lender is set to present its latest World Economic Outlook on April 12 ahead of the IMF and World Bank spring meetings in Washington late next week.
The global outlook has weakened further over the last six months—exacerbated by China's relative slowdown, lower commodity prices, and the prospect of financial tightening for many countries, Lagarde said.
Emerging markets largely led the recovery, while many advanced economies found the recovery to be more moderate than anticipated, she pointed out. Among the emerging markets, India remains a bright spot, she added.
"Our research indicates that spillovers from emerging economies have increased in recent years, including from trade, commodities, and financial markets," Lagarde said.
Regarding structural reforms to support growth, Lagarde said the United States should boost labor supply by expanding the earned income tax credit, increasing the federal minimum wage, and strengthening family-friendly benefits.
She also urged the euro area countries to implement better training and employment-matching policies to help more people find jobs, especially young people.
Commodity-exporters and low-income developing countries should increase diversification, the IMF head said.
In fiscal reforms, Lagarde sought investment in essential infrastructure and innovation. She cited IMF research that found that GDP in advanced economies could increase by 5 percent over the next two decades if private R&D investment was raised by 40 percent.
"This would entail a relatively small fiscal cost of around 0.4 percent of GDP per year—partly achieved through improved public spending and partly through better-targeted tax incentives," she said.
While praising the European Central Bank and its President Mario Draghi for their stimulus efforts, Lagarde said, "We see the recent introduction of negative interest rates by the ECB and Bank of Japan—though not without side effects that warrant vigilance—as net positives in current circumstances."
She also said that the US Federal Reserve's decision to hike interest rates in December was appropriate.
"While accommodation should continue in most advanced economies, it is clear that monetary policy can no longer be the alpha and omega to recovery," Lagarde said.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.