IMF calls for action as euro zone crisis festers

Christine Lagarde, Managing Director, International Monetary Fund (Photo credit: Wikipedia)

London, Oct. 10, stock advice .- The IMF prodded the world's rich countries for swifter action on Thursday as Europe's debt crisis drags on while the United States and Japan show scant progress handling their budget deficits. Christine Lagarde, managing director of the International Monetary Fund, said political wrangling added to economic uncertainty, slowing growth in both advanced and emerging economies. The IMF cut its global growth forecast this week for the second time since April.

"We expect action and we expect courageous and cooperative action on the part of our members," Lagarde told reporters ahead of the IMF's twice-yearly meetings in Tokyo.

The slowdown has not spared emerging market economies, which were instrumental in pulling the global economy out of recession in 2009. Brazil cut interest rates on Wednesday and South Korea on Thursday.

"Developing countries, which have been the engine of growth, will not be immune the increased uncertainty in the global economy," said World Bank President Jim Yong Kim.

"The economic announcements emanating in recent weeks have been sobering. Everyone is vulnerable in times of uncertainty but especially the poor who have few, if any, safety nets and resources and live from day to day."

The IMF has expressed frustration with Europe's piecemeal response to its debt crisis and warned that a recent respite in borrowing costs for debt-laden countries such as Spain may prove short-lived unless euro zone leaders come up with a comprehensive and credible plan.

In its financial stability report on Wednesday, the IMF said that without swift policy action, including the triggering of the European Central Bank's bond-buying program, the premium that investors demand to hold Spanish and Italian debt instead of safer German bonds would nearly double. ... Continue to read.

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