Belfast Telegraph

Global economy is on path to recovery - IMF

By Nick Edwards

The global economy has stepped back from the brink of danger and signs of stabilisation are emerging from the eurozone and the United States, the IMF has said.

However, high debt levels in developed markets and rising oil prices are key risks to any sustained recovery.

"The global economy may be on a path to recovery, but there is not a great deal of room for manoeuvre and no room for policy mistakes," IMF managing director Christine Lagarde said in a speech in Beijing.

In a separate talk, Ms Lagarde said China's yuan could become a reserve currency in the future, adding that the country needed a road map for a stronger, more flexible exchange rate system.

She said signs of stabilisation were emerging to show that policy actions taken in the wake of the global financial crisis were paying off, that US economic indicators were looking a little more upbeat and that Europe had taken an important step forward in solving its crisis with the latest efforts on Greece.

"On the back of these collective efforts, the world economy has stepped back from the brink and we have cause to be more optimistic.

"Still, optimism must not lull us into a false sense of security. There are still major economic and financial vulnerabilities we must confront," Ms Lagarde said.

The IMF chief cited still-fragile financial systems burdened by high public and private debt as the first of three major risks.

"Second, the rising price of oil is becoming a threat to global growth. And, third, there is a growing risk that activity in emerging economies will slow over the medium term," she said.

Ms Lagarde also said youth unemployment should be tackled and that all countries must persevere with their policy efforts if the progress made in stabilising the global economy was to pay off with better prospects ahead.