IMF warns of new recession threat
Baku, September 26 (AZERTAC). Europe needs to "get its act together" and deal with its worsening sovereign debt crisis, the International Monetary Fund said today, warning of the risk of severe repercussions for global growth.
The IMF said both Europe`s debt woes and a painfully slow US recovery could undermine global expansion, and it warned that without action those economies could tip back into recession.
The top economist at the global lender, however, singled out Europe as "a major source of worry" as he released the IMF`s latest World Economic Outlook report.
"There is a wide perception that policymakers are one step behind markets," IMF chief economist Olivier Blanchard told reporters.
"Europe must get its act together," he added.
Investors have questioned Europe`s ability to come up with a convincing solution to its festering sovereign debt crisis, which has rattled confidence and roiled financial markets.
The Fund cut its 2011 and 2012 global growth forecast to 4%, shaving projections for almost every region of the world and saying risks remained tilted to the downside.
Just three months ago it had projected an expansion of 4.3% for 2011 and 4.5% for 2012.
Finance officials from around the world, who gather in Washington later this week for semiannual meetings of the IMF and World Bank, appear to have no clear road map for how to deal with high debt levels and a fragile global recovery.
The IMF`s message to European leaders was that they should do whatever it takes to preserve confidence in national policies and the euro, and it urged the European Central Bank to lower interest rates if risks to growth persisted.
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