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Sluggish global economy hurting emerging economies-warns IMF’s Christine Lagarde

in International Business

Sluggish global economy hurting emerging economies-warns IMF’s Christine Lagarde

The global economic crisis has started to hurt growth in emerging economies warned the International Monetary Fund (IMF) head, Christine Lagarde.

There has been a widespread uncertainty in Europe, America, and other places around the globe, hampering decision makers from investing, from creating jobs, said Ms Lagarde during a press conference in Tokyo.

The main concern is the Eurozone’s debt crisis that has dragged along with it the economies in Asia, hurting growth in export-depended countries such as China, Japan and South Korea.

Earlier this week, the IMF warned that the global economic recovery was getting weaker. The Fund also lowered its global growth forecast, citing the debt crisis in the Eurozone, the fiscal cliff in the US, and record high budget deficit in Japan as the main reasons.

Ms. Lagarde expressed her concern about the delayed recovery of the Eurozone.

“Good news is the fact that this European Stability Mechanism that had been discussed and in the making for the last months has now been christened,” she said.

“In terms of speed, the bad news is that for it to actually operate there will be a legislative and often parliamentary process for the fund to effectively work.”

The conference in Tokyo is taking place at a time of increased political tensions between Asia’s two biggest economies, China and Japan.

The relations between the two were further strained when Japan announced it had purchased a set of disputed islands in the East China Sea, which are claimed by both the countries.

The announcement resulted in a mass protest on China’s streets with protestors attacking Japanese companies.

On Wednesday, the governor of China’s central bank pulled out of the IMF and World Bank meetings.

The country’s finance minister is also unlikely to go, as state media said that Vice-Minister Zhu Guangyao would attend.

Ms Lagarde called upon the two nations to resolve their differences.

“All economic players and partners in this region are very critical for the global economy,” she said.

“We hope that differences, however long-standing, can be resolved harmoniously and expeditiously so that from an economic point of view the co-operation can continue and can be beneficial not only to those countries… but also to the global economy.”

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