Move From ‘Three-speed’ To ‘Full-speed’ Global Recovery, Urges Lagarde

Cooperation more important than ever, given vast interconnections

In interlinked world, uneven global recovery is not enough

Full-speed recovery requires broad, customized policy actions

She told reporters at the 2013 IMF–World Bank Spring Meetings that a “three-speed” global economy comprising countries that are doing well, that are on the mend, and those that still have some distance to travel, would not be sufficient to foster balanced and lasting growth.

“What we need is a full-speed global recovery—one that works with growth that is solid, sustainable, and balanced but also inclusive and very much rooted in green development,” Lagarde told a news conference at the start of the Spring Meetings in Washington, which involve economic policymakers from the IMF’s 188 member countries, government officials, civil society organizations, journalists, and invited participants from the academic and private sectors.

The Spring Meetings agenda includes seminars, regional briefings, and press conferences focused on the global economy, international development, and the world’s financial markets.

Customized policies

Lagarde stressed that a full-speed global economy would require customized policy responses in each of the three speed groups of countries. In particular, the IMF would draw attention to the spillovers that pass through an increasingly interconnected global economy.

“In all of this, cooperation remains essential. That is why the IMF was founded in the first place and—in a world of vast interconnections—it is more important than ever,” Lagarde said.

Lagarde echoed her earlier warning of a three-speed global recovery, involving those countries that are doing well (mainly the emerging markets and developing countries), those that are on the mend (including the United States, Sweden, and Switzerland), and those that still have some distance to travel (such as the Euro Area and Japan).

• First speed group: Emerging markets should rebuild policy space and strengthen financial regulation and supervision while low-income countries should build on success and invest in the future—including by meeting infrastructure and social needs.

• Second speed group: While the United States has managed to avoid the fiscal cliff, it still needs to fix the pace of fiscal adjustment—less and better-quality adjustment now, much more in the future.

• Third speed group: On the euro area, policymakers have accomplished a great deal over a short period of time...