KUALA LUMPUR, Nov 14 (Reuters) - There is “nowhere to hide” in the global economy as a slowdown in Europe and other advanced countries spreads to Asia and uncertainty lingers over the U.S. “fiscal cliff,” International Monetary Fund Managing Director Christine Lagarde said on Wednesday.
Speaking in Malaysia at the start of an Asian tour, Lagarde said in a speech that brisk growth in the region could not be taken for granted next year, although the IMF expects it to expand 2 percentage points faster than the global average.
“It depends on the actions of global policymakers, especially in the United States and Europe. And ‘action’ is the operative word,” Lagarde said.
The IMF last month cut its forecast for global growth in 2012 to 3.3 percent from 3.5 percent, and to 3.6 percent in 2013 from 3.9 percent previously.
The United States must avoid its so-called fiscal cliff of expiring tax provisions and spending cuts, Lagarde said, adding that the measures risk pushing the world’s largest economy into recession and smothering growth elsewhere.
“This policy uncertainty must be resolved, and it will require all sides coming together,” Lagarde said.
Eurozone leaders must deliver on their policy commitments and forge ahead with fiscal and financial integration as they seek a way out of the region’s festering crisis, she said.
Again, “all players must play their part,” Lagarde said.
Her comments come as the IMF and the EU clash over how Greece can bring its debts down to a sustainable level, reigniting fears that Europe’s troubles could flare again.
She said Europe could learn from Asia’s deleveraging and trade openness as it rebounded from its 1997 financial crisis.
“Asia’s economic foundations became safer, sounder, and more resilient - but still open to the world and open for business. This has important lessons for the advanced economies currently facing severe challenges.”
As with Europe, the best way for Asia to guard against volatility was to push ahead with free trade and closer financial integration, Lagarde said.