Today, IMF Managing Director Christine Lagarde said that the global economy could experience years of sluggish growth if central bankers and lawmakers around the world do not act aggressively. She said, “The recovery is taking hold, but is too slow.” She believes that countries need to come together and to use the correct policy measures to prevent years of slow growth. Lagarde also said that the European Central Bank and the Bank of Japan must continue using easy-money policies to fix their low inflation. She also argues that governments world-wide need to come up with policies to increase employment, to reduce debt, and to boost investor confidence. Another issue that could affect growth is the situation in Ukraine. If it is not handled well, the economic and political crisis there could stunt the world’s economic prospects.
Managing Director Lagarde made these comments the day after the IMF extended its access to a $579 billion emergency lending stockpile. The next big marker for how the global economy is when the IMF updates its forecast. The IMF expects to a modest increase from last year’s 3 percent pace. It will be interesting to see Christine Lagarde’s comments influence central banks and governments around the global use her advice.