IMF chief says global economy at inflection point

IMF chief Christine Lagarde said Thursday that the global economy is at an inflection point with weaker than expected recovery momentum, calling for bolder policies and multilateral efforts to inject new impetus.

Speaking at the Georgetown University as an curtain raiser speech of the IMF-World Bank annual meeting, Lagarde said the global economy is weaker than envisaged and only a modest pickup is foreseen for 2015, as the outlook for potential growth has been pared down.

Among advanced economies, the rebound is expected to be strongest in the United States and the United Kingdom; modest in Japan; and weakest in the Euro Area, the Managing Director of the International Monetary Fund noted.

Emerging market and developing economies led by Asia and China will continue to drive global activity, however, to be at a slower pace than before, she said.

"Six years after the financial crisis began, we see continued weakness in the global economy," she added.

She pointed out that there is a cloud hovering around asynchronous monetary policy normalization in advanced economies and its potential spillovers to other countries around the world, urging the Federal Reserve to clearly communicate with the market over the exit from the monetary easing.

She also underlined the rising geographical tensions posing risks to the global economy, as a possible further escalation of the situation in Ukraine could provoke disruptions in commodity prices, financial markets and trade. An expansion of the Ebola outbreak in Africa could pose a significant risk to the region and indeed the world, if not urgently and appropriately addressed.

"That brings me to the 'structural reforms' that are so essential to raise productivity, competitiveness and employment," she noted.

The Washington-based organization is expected to lower its projection of global economic growth for 2014 in its latest edition of World Economic Outlook next week.

The IMF-World Bank annual meeting is scheduled to be held during Oct. 10-12 in Washington.