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Geithner: Work remains despite US fiscal progress

By Elaine Kurtenbach

Associated Press

Published: Friday, Oct. 12 2012 10:05 p.m. MDT

Lagarde contended that it was not an issue of reversing commitments but of adjusting the pace to suit each country's unique situation.

The IMF has scaled back its global growth forecast for 2012 to 3.3 percent from 3.5 percent, and has warned that even its dimmer outlook might prove too optimistic if Europe and the United States fail to resolve their crises.

On Friday, the fund said economic growth in the Asia-Pacific region slowed to 5.5 percent in January-June. That is well above the global average, but the lowest for the region since the financial crisis in 2008. The slowdown is largely because of sluggishness in Europe and the U.S. It also noted weakness in China and India, whose dynamism had helped counter weakness elsewhere.

"The global recovery is still too weak. Job prospects for untold millions are still too scarce, and the gap between the rich and the poor is still way too big," Lagarde said.

Europe's darkening economic outlook is drawing calls for more public support even from austerity champion German Chancellor Angela Merkel. She said Thursday that it was incumbent on Germany, whose 0.3 percent growth in the second quarter helped offset a 0.2 percent contraction among the 17-nation grouping that uses the euro, to "do things to stimulate the European economy."

Lagarde has urged that European creditors give Greece an extra two years to meet austerity targets required to get and continue receiving loans, after the country nearly defaulted on its mountain of debt.

Such accommodations would just confuse markets, increasing uncertainty, Schauble said.

In Japan, both Lagarde and Jim Yong Kim, president of the World Bank, have stressed that without greater equity and equality, growth will be unsustainable.

The IMF's mission is threefold — economic surveillance, advice and providing temporary funding — while the World Bank's mission is to fight poverty. The bank uses funds from donor members and proceeds from bond sales to provide low-interest loans to developing countries.

During the meetings, Kim has spoken often about the need to ensure food security for the poor at a time when spikes in prices have become routine.

To fortify a "safety net" for crises while supporting improvements to make farming more efficient and sustainable, ministers pledged new funds for the Global Agriculture and Food Security Program, a trust fund set up in 2010.

Japan and South Korea each promised $30 million in new funding, while the U.S. pledged to contribute an extra $1 for every $2 contributed by other donors, up to a total amount of $475 million. Including those new funds, the fund has financial support of $1.3 billion.

Associated Press writer Malcolm Foster contributed to this report.

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