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IMF chief: Leaders must stop global depression

International Monetary Fund head Christine Lagarde has warned that the global economic outlook is “gloomy” and that no country is safe from the rising concerns.

Speaking at the US State Department in Washington, Lagarde said all international leaders must act together to stop a global depression, starting with a focus on tackling the eurozone debt crisis.

She said: “The world economic outlook at the moment is not particularly rosy. It is quite gloomy. There is no economy in the world that will be immune to the crisis that we see not only unfolding but escalating.

“It is going to require efforts, it is going to require adjustment, and clearly it is going to have to start from the core of the crisis at the moment, which is obviously the European countries and in particular the countries of the eurozone.”

Lagarde’s comments come amid fears that rising borrowing costs in France, Italy and Spain could see them be the next country in need of a bail-out. Only yesterday, ratings agency Standard and Poor’s downgraded 10 Spanish banks by applying new ratings criteria.

Lagarde said the only bright spots in the global economy came from Asia and Latin America, which had taken the opportunity during their own crises in the 1980s and 1990s to address weaknesses in their banking system.

Lagarde said: “All those challenges that they faced in the days of the Asian crisis, of the Latin American crisis, have now served them well.”

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