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Make reforms while sun shines on world economy: Lagarde

Wednesday, January 03, 2018

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PARIS, France (AFP) — International Monetary Fund chief Christine Lagarde has urged France and other countries to push through reforms “while the sun is shining” on the global economy.

In an interview with France's Le Journal du Dimanche published Sunday Lagarde said the strength of the global economic recovery had taken the IMF by surprise.

“In 2017, for the first time in a long time, we revised our growth forecasts upwards whereas previously we used to lower them,” she said.

Global growth of 3.6 per cent was both “stronger and more widely shared” in 2017, she said, noting that developed economies were now growing again under their own steam and no longer merely being pulled along by demand in emerging markets.

Lagarde said the favourable climate lent itself to implementing reforms.

“When the sun is shining you should take advantage to fix the roof,” she said, using one of her favourite maxims.

This year's global growth is on a par with the average of the two decades leading up to the global financial crisis of 2007-2008.

The IMF has forecast a further slight improvement in 2018, to 3.7 per cent.

In Lagarde's native France, seen for years as one of Europe's weak links, the recovery kicked in in earnest this year.

From 1.1 per cent in 2016, growth is expected to rise to 1.9 per cent in 2017 — still short of the 2.4 per cent forecast for the eurozone as a whole but better than the 1.6 per cent initially forecast in the eurozone's second-largest economy.

Centrist President Emmanuel Macron aims to consolidate the momentum and bring down stubbornly high unemployment with an ambitious programme of labour, tax and welfare reforms.

Lagarde said the changes were key to boosting France's credibility at a time when Macron is pushing for reforms at the European level, including closer integration among eurozone members.

The managing director of the IMF was France's finance minister in 2008, when the euro looked to be in serious jeopardy.

Nearly 10 years later, the currency is out of the woods.

But, Lagarde warned, “The mission has not been accomplished — and maybe never will — because Europe is not united on moving towards greater integration while maintaining national sovereignty.”

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