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I.M.F. Warns Against ‘3-Speed’ Recovery I.M.F. Warns Against ‘3-Speed’ Recovery
(about 2 hours later)
WASHINGTON — Christine Lagarde, managing director of the International Monetary Fund, called for moving the world into a “full-speed recovery” at a news conference on Thursday at the opening of the fund’s annual spring meetings with its sister institution, the World Bank. Christine Lagarde, managing director of the International Monetary Fund, called for moving the world into a “full-speed recovery” at a news conference on Thursday at the opening of the fund’s annual spring meetings with its sister institution, the World Bank.
This week, the I.M.F. released new economic forecasts lowering its estimates for global growth, while also citing dimished risks of a severe financial disruption in Europe or sharp fiscal policy adjustment in the United States. Ms. Lagarde, echoing an earlier warning, expressed concern about what she called a “three-speed” global economy, with developing nations growing rapidly, the United States healing faster than most other advanced industrial countries but Europe continuing to suffer from insufficient demand and incomplete government policies.
Ms. Lagarde warned again of a “three-speed” recovery, with developing nations growing apace, stronger advanced industrial economies like the United States healing and Europe continuing to suffer from insufficient demand and incomplete government policies. “It’s not the healthiest recovery,” Ms. Lagarde said. But “we believe that we have avoided the worst, and the economic world no longer looks quite as dangerous as it did.”
“It’s not the healthiest recovery,” Ms. Lagarde said, but added, “We’ve avoided the worst.” She added: “The pickup in financial conditions, financial markets, is clearly not translating into a sustained pickup in growth and jobs.”
The news conference came shortly after news broke that a French court had ordered Ms. Lagarde to appear at a hearing regarding an inquiry during her time as finance minster in Paris. The news conference came shortly after news broke that a French court had ordered Ms. Lagarde to appear at a hearing regarding her handling of a financial scandal during her time as finance minister in Paris.
Asked about the affair at the news conference, Ms. Lagarde said that she had known for years of the possibility that she would be interviewed by the investigative commission. “There is nothing new under the sun,” Ms. Lagarde said, dismissing any concerns about the investigation. Asked about the affair at the news conference, Ms. Lagarde said that she had known of the possibility of being interviewed by the investigative commission for years. “There is nothing new under the sun,” Ms. Lagarde said, dismissing any concerns that the inquiry would affect her position as the head of the I.M.F. “I will be very happy to travel for a couple of days to Paris. I look forward to it.”
Ms. Lagarde gave her blessing to recent actions taken by the Bank of Japan to help bolster growth. She also said the European Central Bank had more room to aid a recovery in Europe, where many countries are still undergoing economic contraction, unemployment continues to rise and the credit markets remain broken. The investigation, which led to a police raid of Ms. Lagarde’s apartment in Paris last month, concerns her decision in 2007 to refer to an arbitration panel a decades-old dispute between Bernard Tapie, a wealthy friend of France’s president at the time, Nicolas Sarkozy, and the state-owned bank Crédit Lyonnais. The panel ultimately brokered a settlement that awarded Mr. Tapie, the flamboyant former owner of the Olympique Marseille soccer team, about $580 million, including interest.
The court’s summons of Ms. Lagarde could lead to the opening of a formal investigation of her role in the affair. But in France, being placed under formal investigation does not necessarily lead to charges and does not imply a presumption of guilt. Ms. Lagarde has repeatedly denied any wrongdoing in the Tapie matter.
At the news conference, Ms. Lagarde gave her blessing to recent actions taken by the Bank of Japan to help bolster growth. She also said that the European Central Bank had more room to aid the recovery in Europe, where many countries are still undergoing economic contraction, unemployment is still rising and the credit markets remain broken.
“Of all the major central banks in the world, the E.C.B. is the only one who clearly still has room to maneuver,” Ms. Lagarde said.“Of all the major central banks in the world, the E.C.B. is the only one who clearly still has room to maneuver,” Ms. Lagarde said.
Asked if Spain needed more time for fiscal adjustment, Ms. Lagarde replied that it did. She said the country needed to put a budget-tightening plan in motion, but it need not be “upfront, heavy duty” fiscal consolidation. “Spain needs more time and needs to be able to adjust,” Ms. Lagarde said. Asked if Spain needed more time for fiscal adjustment, Ms. Lagarde replied that it did. She added that the country needed to put a budget-tightening plan in motion, but that it need not be “upfront, heavy duty” fiscal consolidation.
At a separate news conference, Jim Yong Kim, the head of the World Bank, which focuses on economic development, laid out his grand vision for a “two-pronged approach for a world free of poverty.” At a separate news conference, Jim Yong Kim, the head of the World Bank, which focuses on economic development, laid out his vision for a “two-pronged approach for a world free of poverty.”
Dr. Kim has called for eradicating extreme poverty by 2030 and for fostering income growth for the bottom 40 percent in every country. “For that second goal, we also mean sharing prosperity across generations, and that calls for bold action on climate change,” Dr. Kim said. Dr. Kim has called for eradicating extreme poverty by 2030 and for fostering income growth for the bottom 40 percent in every country. “For that second goal,” he said, “we also mean sharing prosperity across generations, and that calls for bold action on climate change.”
“Doing better on growth means doing even more of the kinds of reforms that have underpinned the strong developing-country growth of the past 15 years,” he said. “That means eliminating bottlenecks; additional investment in infrastructure; and, to ensure that the poor participate in the benefits of growth, much greater investments in education and health care. As we move ahead, we also must address climate change with a plan that matches the scope of the problem.”

Nicola Clark contributed reporting from Paris.