Global economy needs bold action to solidify growth

WASHINGTON -- Managing Director of the International Monetary Fund (IMF) Christine Lagarde said on Thursday that the global economy is turning the corner, but the recovery is still too weak and too slow with 200 million people unemployed.

China's GDP growth target for 2014 set at 7.5 percent

Infographic: Five key words from Li's govt report

"Bold actions are needed to generate more rapid, stronger, and sustainable growth", Lagarde said at a news conference before the IMF-World Bank Spring meeting, scheduled for Friday.

The IMF slightly lowered its projection of world economic growth to 3.6 percent for this year, and 3.9 percent for next year.

The IMF is concerned about an extended period of low inflation in advanced economies in general, particularly in the euro area, Lagarde said, reiterating that the euro area should take unconventional monetary measures "the sooner the better".

She said advanced economies also need to get the pace of fiscal adjustment right and the normalization of their monetary policy right in due course as well. It will be about timing, and communication.

Emerging market economies need to strengthen macro and prudential policies to safeguard against market volatility, but she also noted the lost of momentum of emerging markets "is a little bit overdone".

"They are still providing the bulk of growth. What is new is that advanced economies have picked up, and there is that rebalancing happening at the moment. But I wouldn't call that a shift. I would call it rebalancing." she said.

On the Chinese economy, Lagarde said China is playing a key role with 7.5 percent growth target for 2014, it is clearly contributing significantly to the global growth.

She would not characterize the recent increased variation of China's currency renminbi, or yuan, as an intended depreciation of the currency, but a move in the direction of yuan's internationalization.

"Certainly we welcome the internationalization of the renminbi going forward. I believe there will be steps in that direction going forward," she noted.

Talking about the long-delayed IMF 2010 quota and governance reform which was blocked by the veto-powered United States, Lagarde said the IMF is not giving up.

"It is important because it matters for the credibility of the institution. It matters for the size of the institution. And we certainly look forward to a good dialogue during the IMFC on those particular issues so that we can rally support across the board," she said.

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