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| Christine Lagarde [FILE PHOTO] |
Tokyo: Managing Director of the International Monetary Fund (IMF) Christine Lagarde today said that the continuing global economic crisis needs a cooperative policy response more than ever before. In this regard, Lagarde paid tribute to Japan’s global citizenship and its deep support for international cooperation.
“Over the past few months, the outlook has, regrettably, become more worrisome,” Lagarde said in a speech to a policy forum organized by Nikkei ahead of the October 2012 Annual Meetings in Tokyo. There are signs of slowing economic activity across both advanced and emerging economies.
While developments in Europe remain the most pressing risk for the global economy, Lagarde was encouraged by the outcome of the June 28 Summit, where “European leaders agreed to significant steps in the right direction to address the immediate crisis.” Yet, she stressed that “further progress will continue to be needed to overcome the crisis decisively and avoid the damaging effects on stability and growth.”
However, Lagarde was clear that the crisis is not just a European concern. “This is a global crisis. In today’s interconnected world, we can no longer afford to look only at what goes on within our national borders. This crisis does not recognize borders.”
Japan and the Asian region have coped with the crisis remarkably well so far, contributing more than half of total global growth since 2008. However, “this does not mean that Asia is immune. The spillovers from Europe are increasingly visible here,” Lagarde said.
Given these interconnections and the potential for spillovers, Lagarde stressed the need for effective solutions to be grounded in cooperation. She welcomed recent examples of countries taking account of those connections, including recent actions in Europe and the decision to strengthen the Chiang Mai Initiative Multilateralization.
Lagarde outlined the need for coordinated policy actions in three areas: dealing with high public debt across advanced economies; repairing and reforming the financial sector; and delivering strong, sustainable and inclusive growth.
As global policymakers work to tackle these challenges, Lagarde said Japan’s partnership and spirit of community was an invaluable guide for the international community. “When the global economy faced its darkest hours, you stood by your fellow global citizens,” Lagarde said, praising Japan being the “first to offer loans to boost the IMF’s resources and help stave off an even more dire global economic collapse.”
Lagarde was also impressed by the “heroic community response and the amazing adaptability of the Japanese people” following the Great East Japan earthquake and tsunami.
The IMF-World Bank Annual Meetings will take place in Tokyo this October, in a year that celebrates sixty years of membership at of both institutions. Looking ahead to the meetings, Lagarde said “the whole world will be looking to Japan’s leadership, spirit, and commitment to multilateralism—at a time when the world needs these qualities, and needs Japan, more than ever before.”