By Judith Ugwumadu | 3 October 2014

International Monetary Fund chief Christine Lagarde has called on governments across the world to inject new momentum into what she called the brittle and uneven economic recovery, warning that global growth had hit an ‘inflection point’.

In a speech in Washington DC yesterday, the fund’s managing director addressed the challenges facing the global economy, ahead of the IMF and World Bank annual meetings taking place this month.

She said that there was a need for bolder polices to help boost economies, including growth friendly fiscal policies that could address tax evasion, more efficient public spending and structural reforms of labour markets to raise productivity, competitiveness and employment. Infrastructure investment was also needed in countries where transport and energy supply bottlenecks risked hampering development.   

Lagarde cautioned that growth following the recovery from the financial crisis had so far been weak and was ‘not good enough’, adding that the world risked being stuck with a ‘mediocre’ level of expansion for some time.

Lagarde said: ‘Overall, the global economy is weaker than we has envisaged even six months ago. Only modest pickup is foreseen for 2015, as the outlook for potential growth has been pared down.   

‘The global economy is at an inflection point. It can muddle along with sub-par growth – a “new mediocre” – or it can aim for a better path where bold policies would accelerate growth, increase employment and achieve a new momentum.

‘For one thing, we need better balance in our policy toolkit – using both the demand and supply side of the economy. You need teamwork. Each policy instrument must play its part in order to achieve proper balance.’

She also noted that geopolitical risks such as possible further escalation of the situation in the Ukraine, political developments in the Middle East and in some parts of Asia, and an expansion of the Ebola outbreak in Africa ‘should not be ignored’.