The International Monetary Fund (IMF) is expecting its new forecast for global growth next month to be weaker than anticipated as worries over Eurozone crisis and recession in U.S. economy remain unabated, IMF head Christine Lagarde said on Monday.
"We continue to project a gradual recovery, but global growth will likely be a bit weaker than we had anticipated even in July, and our forecast has trended downward over the last 12 months,” Lagarde said in a speech at the Peterson Institute for International Economics in Washington, DC.
In July, the IMF cut its global growth forecast to 3.5 percent in 2012 and to 3.9 percent in 2013.
Lagarde urged policymakers around the world to take the actions needed to achieve a decisive turn in the global crisis.
“This time, we need a sustained rebound, not a bounce. If this time is to be different, we need certainty, not uncertainty. We need decision makers to be real action takers. We need delivery,” she said.
Addressing the debt crisis in Eurozone, Lagarde called on euro area leaders to keep their June 29 commitments by establishing a single supervisory banking mechanism, enabling the direct recapitalization of banks and “implementing the European financial firewall—notably the European Stability Mechanism.”
The IMF chief also warned the United States against plunging into deep government spending cuts and substantial tax increases as it could lead to another recession and hurt the global economy. Lagarde suggested that the U.S. administration should “bring down debt gradually over the medium term.”