IMF chief warns of a 'lost decade' for global economy
F chief warns of a 'lost decade' for global economy
The eurzone debt crisis has caused huge volatility in global stock markets
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The head of the International Monetary Fund, Christine Lagarde, has warned that the global economy is at risk of being plunged into a "lost decade".
Ms Lagarde said the ongoing debt crisis in Europe has resulted in an uncertain outlook for the global economy.
The IMF chief added that whilst efforts to solve the crisis were heading in the right direction, more needed to be done to restore confidence.
Speaking in China, Ms Lagarde called upon Beijing to rebalance its economy.
"Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand," she said.
"We could run the risk of what some commentators are already calling the lost decade," Ms Lagarde added.
'Clouds on the horizon'
Ms Lagarde's comments come amid fears that the eurozone debt crisis may be spreading to some of the region's biggest economies.
On Tuesday, Italy's cost of borrowing rose to 6.77%, the highest level since the euro was founded in 1999, raising concerns about its capacity to service its debts.
This has led to concerns that Italy may have to bailed out just like Greece, the Irish Republic and Portugal.
The fear is that as the eurozone debt crisis spreads to the region's biggest economies, it will have a big impact on growth.
At the same time, there have been concerns about a slowdown in the US as it struggles to boost growth amid high rates of unemployment.
Ms Lagarde said the combination of these factors were a big threat to global growth.
"There are clearly clouds on the horizon," she said. "Clouds on the horizon particularly in the advanced economies and particularly so in the European Union and the US."