IMF: Global Economy Hit By Crisis of Confidence

Posted September 24th, 2011 at 3:15 am (UTC-5)
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The head of the International Monetary Fund says the global economy is in the grip of a “crisis of confidence” and urged nations to move quickly to restore job-creating economic growth.

IMF Managing Director Christine Lagarde spoke Friday, as finance ministers and central bankers from around the world gathered in Washington for three days of talks with World Bank officials and others. Lagarde said that while the problems may be largely economic, the solutions are largely political.

Her remarks follow days of turmoil in financial markets that saw steep losses and some modest gains as investors worried the world may be headed into another recession.

Analysts say investors are skeptical that political leaders in Europe will solve government debt problems, or that Washington politicians will stop bickering and take steps to bolster growth and jobs.

The week's downturn began after the U.S. central bank warned that it sees “significant downside risks” to the already struggling U.S. economy, and that a complete recovery is years away.

Thursday, finance officials from 20 of the world's emerging and wealthy nations pledged to launch a coordinated effort to bolster the struggling global economy. The action had little immediate impact on financial markets.