The fiscal austerity measures to which the main advanced economies are called to commit themselves could have a heavy impact on economic growth in the short term. This was stated by Christine Lagarde, director of the International Monetary Fund, at a conference in New York. According to IMF estimates, cutting the deficit-GDP ratio by one point "could lower economic growth by half a percentage point over two years".
“The impact of fiscal consolidation plans on economic growth will likely be negative in the short term. For this reason, measures that were approved today would be welcome, but implementing the reduction of deficits only in the future, when the economic recovery will be more robust". "In the long term - added Lagarde, however - debt reduction can strengthen the product, favoring a lowering of market rates and creating the margins for cutting official interest rates".
The director of the IMF also spoke about the Greek crisis and the need for the United States to raise the debt ceiling. “The Eurozone must quickly implement the plan to counter the debt crisis. The agreement reached last week by European leaders was welcomed, but the commitments made at the summit need to be implemented as soon as possible”. Even the United States must immediately take action to immediately resolve the problem of the parliamentary tug of war on the limits to the budget deficit. “A possible budget shock in the United States – warned Lagarde – could have serious repercussions on the rest of the world”. The United States must have a budgetary consolidation plan soon and aim for a recovery in employment. “I hope – he concluded – that the political courage shown by European leaders will soon be followed up in the United States with the launch of strong action on the budget”.
