Christine Lagarde, managing director of the International Monetary Fund, has expressed greater confidence in the global economy but cautioned that it remains in the “danger zone”.
When visiting China in November last year, Lagarde warned that the international economy had entered a “dangerous and uncertain phase” and predicted that the world was at risk of a “lost decade” of low growth and high unemployment.
But speaking in Beijing over the weekend, the IMF head said: “Fortunately, I am visiting in global circumstances that are a little more comfortable than they were last November.
“Then, I referred to the ‘dark clouds’ over the world economy, but today there are signs that those clouds may be beginning to disperse.”
Lagarde claimed strong policy action, especially in the eurozone, a calming of the financial markets and an improvement in economic indicators, most notably in the US, are the reasons for her renewed optimism.
However, she added: “The global economy is not yet out of the danger zone: financial systems are still fragile; public and private debt is still too high; and unemployment is still a major problem.”
The rising price of oil, which has pushed Brent above the £76 a barrel mark, was offered as a “new threat” to global economic recovery by Lagarde.