Rising oil prices threat to global growth: IMF
Describing rising price of oil a threat to global growth, IMF chief Christine Lagarde on Sunday called upon emerging economies to "invest in reforms" to attain higher growth.business Updated: Mar 18, 2012 20:43 IST
Describing rising price of oil a threat to global growth, IMF chief Christine Lagarde on Sunday called upon emerging economies to "invest in reforms" to attain higher growth.
"Emerging market economies need to calibrate macroeconomic policies both to guard against further fallout from the advanced economies as well as to keep overheating pressures in check," she said at a meet.
Lagarde, who is scheduled to reach India on Monday, said that "by continuing to invest in reforms —- such as increasing social transfers or lowering consumption taxes -— they (EMEs) can, over time, translate higher growth into better living standards for all".
She pointed that after years of difficulties in wake of global crisis, the financial-market conditions are more comfortable and recent economic indicators are beginning to look a little more upbeat, including in the US.
"... the world economy has stepped back from the brink and we have cause to be more optimistic," she said.
Still, there are major economic and financial vulnerabilities that "we must confront," she added.
"The rising price of oil is becoming a threat to global growth. And, ...there is a growing risk that activity in emerging economies will slow over the medium term," she said.
High international crude prices are impacting India's finances also. Except for petrol, Indian government provides subsides on sale of diesel, kerosene and LPG.
The International Monetary Fund (IMF) chief further said the advanced economies need to capitalise on the "newly gained breathing space" and push forward with policies that will enable them to emerge from the crisis.
Lauding China's global leadership, she said "For many years now, China’s economic successes have captured the world’s attention. We have looked on in awe as, year after year, China has posted spectacular growth...".
As one of the IMF’s largest shareholders and as an influential member of the G-20, Lagarde said, China has been instrumental in helping to make the global economic system less prone to damaging crises.
In January, European countries reached an agreement on a pact that would call on EU members to introduce legislation requiring balanced budgets, a move designed to calm fears over sovereign debt. The IMF also approved a new 28-billion-euro loan for debt ridden Greece.