IMF chief Lagarde: Global economy at risk of ‘lost decade’

9 November 2011 8:25 am | By Chris Salih

The head of the International Monetary Fund Christine Lagarde has warned that the global economy may be facing a “lost decade”.

According to the BBC, Lagarde said the debt crisis in Europe had resulted in an uncertain outlook for the global economy and that more needed to be done to address it.

Speaking in China, Lagarde said: “Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand,” she said.

“We could run the risk of what some commentators are already calling the lost decade,”

Earlier this week, the yield on 10-year Italian bonds soared to a record high since the euro was founded of 6.77 per cent. The move has raised fears Italy is set to follow Greece, Ireland and Portugal in requiring a bailout. There have also been concerns of a slowdown in the US as it continues to tackle growth.

Lagarde said these factors would have a big impact on global growth.

She said: “There are clearly clouds on the horizon, particularly in the advanced economies and particularly so in the European Union and the US.”

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