core sector communique

IMF Managing Director Christine Lagarde Calls for Cooperative Response to Crisis, Praises Japan’s Role

July 6, 2012

Christine Lagarde, Managing Director of the International Monetary Fund (IMF) today said that the continuing global economic crisis needs a stronger cooperative policy response. In this regard, she paid tribute to Japan’s deep support for international cooperation.

“Over the past few months, the outlook has, regrettably, become more worrisome,” Ms. Lagarde said in a speech to a policy forum organized by Nikkei ahead of the October 2012 Annual Meetings in Tokyo. There are signs of slowing economic activity across both advanced and emerging economies, she said.

Lagarde outlined the need for a more coordinated policy response in three main areas: dealing with high public debt across advanced economies; repairing and reforming the financial sector; and delivering strong, sustainable and inclusive growth.

As global policymakers work to tackle these challenges, Lagarde said Japan’s partnership and spirit of community was an invaluable guide. “When the global economy faced its darkest hours, you stood by your fellow global citizens,” Lagarde said, noting in particular that Japan had been the “first to offer loans to boost the IMF’s resources and help stave off an even more dire global economic collapse.”

While developments in Europe remain the most pressing risk for the global economy, Lagarde said that, at the June 28 Euro Area Summit, “European leaders agreed to significant steps in the right direction to address the immediate crisis.” At the same time, she emphasized that “further progress will continue to be needed to overcome the crisis decisively and avoid the damaging effects on stability and growth.”

Lagarde emphasized that the crisis is not just a European concern. “This is a global crisis. In today’s interconnected world, we can no longer afford to look only at what goes on within our national borders. This crisis does not recognize borders.”

Japan and the Asian region have coped with the crisis remarkably well so far, contributing more than half of total global growth since 2008. However, “this does not mean that Asia is immune. The spillovers from Europe are increasingly visible here,” Lagarde said.

Lagarde stressed the need for effective solutions to be grounded in cooperation. She welcomed recent examples of countries taking account of those connections, including the recent actions in Europe and the decision to strengthen the Chiang Mai Initiative Multilateralization in Asia.

Lagarde also said that she was impressed by the “heroic community response and the amazing adaptability of the Japanese people” following the Great East Japan earthquake and tsunami—and by the remarkable progress that had been made in recovering from those events.

The IMF-World Bank Annual Meetings will take place in Tokyo this October, in a year that celebrates Japan’s sixty years of membership in both institutions. Looking ahead to the meetings, Lagarde said “the whole world will be looking to Japan’s leadership, spirit and commitment to multilateralism—at a time when the world needs these qualities, and needs Japan, more than ever before.”