WASHINGTON—With fears of a European economic meltdown calmed for now, countries around the world should use the breathing space to enact strong fiscal and monetary policies to create jobs and improve financial sector stability, International Monetary Fund Manager Director Christine Lagarde said Thursday.
Despite the recent actions in Europe, “the risks remain high and the situation fragile” for a global recovery, Lagarde said at a Brookings Institution briefing on the world economy.
Lagarde pointed to three important factors for sustainable growth: a financial system that supports rather than destabilizes the economy, better regulation and supervision across countries and more robust labor markets.
She warned against complacency on financial sector reform while noting that the U.S. has passed legislation to improve consumer rights and financial oversight.
A financial system that provides credit, growth and jobs is vital to many Americans who are struggling on tighter budgets or to find jobs, she said. For the United States, the IMF chief said, “fiscal adjustment is essential.”
Mara Grbenick/MNS
While the IMF does not advocate any one fiscal or monetary policy, it supports a country-specific approach to spurring short-term growth and stimulating demand.
The IMF-World Bank 2012 Spring Meetings take place in Washington next week.