Lagarde calls on states to "seize the opportunity" of global recovery

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GMT 6:23 2017 Friday, October 6th : Last Updated

Lagarde calls on states to "seize the opportunity" of global recovery

a. F. B.

 

 

WASHINGTON (Reuters) - The global economic recovery is taking hold, calling on nations to adopt reforms aimed at lasting prosperity on a larger scale, IMF director Christine Lagarde said on Thursday.

"The long-awaited global recovery is taking root," she said in a speech on Thursday evening at Harvard's Kennedy School. Countries around the world are witnessing a renewed or sustained economic expansion that coincides with increased stability in banks and market confidence.

"Will the world be able to take advantage of this improvement, to stabilize the recovery and create a more inclusive economy that works for everyone?" Lagarde asked.

Her remarks come a week before the annual meetings of the International Monetary Fund and the World Bank with the participation of 189 member states, in which the Fund will unveil updated forecasts of global growth.

Since last year, the International Monetary Fund (IMF) has faced a wave of populism in the developed world, particularly in an anti-trade bias in the United States and Europe.

Lagarde warned of a range of risks looming, including slow growth, increasing inequality in advanced economies and failure to adapt to technological change.

"As a result, our social fabric is disintegrating and many countries are experiencing increasing political polarization," she said.

Lagarde stressed that failure to act "would cause a good recovery" which would weaken growth, slow job creation, disintegrate social safety nets and expose financial systems to future crises.

In addition to calling for monetary and financial policies that support growth, Lagarde stressed the need for countries to invest in infrastructure, research and development to boost productivity and demand, thereby reducing unemployment.

Expanding access to health care and education as well as gradual taxation are factors that can help reduce social inequality, she said.

Lagarde said research by the International Monetary Fund "showed that excessive inequality was hampering growth, undermining the economic foundations of countries ... weakening confidence within society and fueling political tensions."

The IMF director said climate change was "a threat to every economy and every citizen," adding that an average annual increase in temperatures in countries such as Bangladesh would cut GDP per capita by about 1.5 percent.

"Policymakers should use all the tools available to them to move now," she said.