Washington — The global economy has entered a "timid recovery" and still faces high risks, says International Monetary Fund (IMF) Managing Director Christine Lagarde.
Speaking at the opening of the annual IMF and World Bank Spring Meetings in Washington April 19, Lagarde called on policymakers around the world to work together in addressing challenges, such as high unemployment, protracted slow growth and potential oil price hikes, that pose a threat to global economic recovery.
The director's comments followed the April 17 release of the IMF's annual World Economic Outlook, a report delivering a global economic growth forecast of 3.5 percent for 2012 and 4.1 percent for 2013. The report predicts continued strong growth in emerging and developing economies, but a growth forecast of only 1.4 percent in 2012 and 2 percent in 2013 for advanced economies.
Lagarde said that to promote global economic stability and a stronger recovery, the IMF needs to increase its firepower through new pledges of financial support. The fund has $320 billion in current pledges from member countries, but expects to gain more support for poverty-reduction efforts, multilateral surveillance and governance reforms during the meetings.
Outgoing World Bank President Robert Zoellick spoke following Lagarde to officially open the meetings April 19.
He said in prepared remarks that the meeting's modernization agenda "involves a rigorous focus on results, openness and accountability." Emphasizing the importance of democratic development, he said the IMF and World Bank are taking steps that "lay the foundation for expanding social accountability, fighting corruption and building better governance."
"Investments in civil society and good governance are as vital as investments in roads, factories and clinics," Zoellick said before announcing the formation of a new Global Partnership for Social Accountability to provide support to civil society organizations.
He said countries, both developed and developing, need to focus on structural reforms to drive future growth. To do its part, Zoellick said, the World Bank and the IMF have outlined a structural growth agenda that prioritizes public-private partnerships in developing infrastructure as well as gender and financial inclusion, so that countries may "gain the growth opportunities from empowering all their people."
Zoellick said developing countries in particular are "vital to the world economy," and have provided two-thirds of global economic growth in the past five years.
But he said even countries with fast-growing economies face significant challenges, and that working together with other nations around the world is the only way to achieve widespread and sustained growth and global stability.
Lagarde and Zoellick are scheduled to meet with global financial leaders on a wide range of topics including poverty reduction, women's economic participation and strategies to create jobs before the meetings end April 21.