The "vicious cycle" of weak growth and deficit budgets "is gaining momentum and has been exacerbated by indecision and political dysfunctionalities: we must act". The director general of the International Monetary Fund (IMF), Christine Lagarde, returns to office on the occasion of the presentation of the next annual meeting of the organization, after the recent controversies following her attack on the need for further recapitalization of European banks to protect them from the risk of contagion.
"Without collective and decisive action, there is a real risk that the major economies will slide backwards instead of forwards," Christine Lagarde, IMF director general, said in a speech ahead of the meeting of the IMF and the World Bank the next week.
“Global growth is slowing – he added – with advanced economies facing an anemic and uncertain recovery. Conversely, emerging economies are in an overheating situation with rising inflation, strong credit growth and expanding current account deficits.
Lagarde further said that subdued economic growth and weak public budgets in developed countries are affecting each other, fueling a crisis of confidence and a decline in demand, investment and employment.
