IMF's Christine Lagarde: Uncertainty Weighing on Growth
Global uncertainties, including the euro zone debt crisis and the U.S. fiscal negotiations, are still weighing on growth, International Monetary Fund (IMF) Managing Director Christine Lagarde told CNBC on Friday.
Speaking at the World Economic Forum in Davos, Switzerland, Lagarde said the global economy is in a "timid recovery".
"It is timid because there is still a bit of uncertainty as to what will happen in the euro zone, what the outcome of the discussions between Congress and the president and the administration in the U.S. will be, what will be the consequences of the new Japanese policies that have been announced, and what will pan out in China when the new leaders take over in March," Lagarde said.
On Wednesday, the IMF cut its 2013 global growth forecast to 3.5 percent from its previous estimate of 3.6 percent, made in October.
(Read More: IMF Cuts World Growth Forecast on Euro Crisis)
The IMF estimated advanced economies will grow by an average of 1.5 percent this year, while developing and low income countries will grow by 5.5 percent.
"There is a lot of uncertainty out there, but there is a clear determination – at least announced by leaders – to settle what has already been decided in 2012," Lagarde said.
Regarding the euro zone, Lagarde said the region must maintain momentum in reducing deficits and over the long-term, debt. On Wednesday, the IMF cut its 2013 outlook for the euro zone from 0.2 percent growth to 0.2 percent contraction.
Lagarde added that she supported central bank stimulus measures by the Federal Reserve, European Central Bank, the Bank of England and the Bank of Japan.
"It was needed, it was good and it is still needed," she said.
Lagarde also praised European policymakers' efforts in recapitalizing the banking sector and establishing acceptable liquidity ratios. However, she said she was concerned by the lack of European and worldwide standards in other aspects of finance, such as accounting.
"I think this is a problem. You always have to reconcile standards and thresholds and requirements, which is not helpful in a world that is very open," she said. "Ideally, there should be global principles and standards."
