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IMF Warns of Sub-Par Growth
The world economy is so weak it risks getting stuck in a "low-growth trap" for years, says International Monetary Fund Managing Director Christine Lagarde.
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The world economy is so weak it risks getting stuck in a "low-growth trap" for years, says International Monetary Fund Managing Director Christine Lagarde.
She calls for "brave action" to avert the risk of an era of "low-flation," especially in the eurozone. She urges the European Central Bank to take unspecified unconventional measures to ease monetary policy.
Lagarde says the global economy should grow more than 3% in 2014 and 2015. But she cautions that a lack of innovative monetary policy and reforms in public investment and labor markets could mire the global economy in years of slow expansion.
In January Lagarde asserted that last year's microscopic 0.8% inflation rate for the eurozone might portend a dangerous period of deflation. The IMF notes that March marked the region's sixth consecutive month in the "danger zone" of sub-1% growth.
Lagarde remains wary of the negative impact on emerging markets of the gradual unwinding of the U.S. Federal Reserve's $85 billion bond-buying stimulus program. Last month Fed Chair Janet Yellen hinted the U.S. central bank might begin raising interest rates by autumn.
The IMF will hold its spring meeting next week in Washington, D.C.
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