Global economy's ‘timid’ recovery faces high risks

  • 2012-04-20

LAGARDE: Action taken in the last six months shows ‘significant determination’ to defend Europe’s common currency (IMF photo).

BRUSSELS - International Monetary Fund (IMF) Managing Director Christine Lagarde warned of "dark clouds" hanging over the global recovery, with the eurozone at the heart of the problem, EU Observer reports.

“The global economy has entered a ‘timid’ recovery but still faces high risks, with some dark clouds on the horizon,”  Lagarde told reporters on April 19 in Washington.

"The eurozone is the epicenter of potential risk," she warned.

Her comments come ahead of the IMF's spring meeting, which is to decide on increasing its own resources - part of which could also be used to fund further eurozone bail-outs.

Lagarde said she has already received pledges of over 240 billion euros out of its 300 billion euros goal - most of which would come from the eurozone countries themselves, the rest being committed by non-euro states such as Japan, Sweden, Poland, Denmark, Norway and Switzerland. The US has so far not put up any cash on top of its regular contribution.

As for Europe's own financial 'firewall' made up of a temporary and a permanent - yet non-existent - bail-out fund, Lagarde said EU governments have taken "significant steps in recent months" and made a "significant improvement of the firewall."