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IMF head urges caution to avoid harming recovery
IMF chief Lagarde says policymakers need to avoid mistakes that could harm global recovery
By MARTIN CRUTSINGER
Associated Press
2014-01-16 03:22 AM

WASHINGTON (AP) -- The head of the International Monetary Fund warned policymakers on Wednesday to avoid mistakes that could derail a fragile global recovery.

IMF Managing Director Christine Lagarde said that Congress should promptly increase the U.S. government's borrowing limit and the Federal Reserve should avoid withdrawing its financial support too rapidly.

Lagarde noted that the world economy is still feeling the impact of the Great Recession and 2008 financial crisis.

"The crisis still lingers. Yet, optimism is in the air," Lagarde said in a speech at the National Press Club. "My great hope is that 2014 will prove momentous."

Lagarde said that the IMF will update its World Economic Outlook next week and the revision will show slightly stronger growth than the last forecast the IMF made in October.

"Momentum strengthened in the latter half of 2013 and should strengthen further in 2014, largely due to improvements in the advanced economies," she said.

Lagarde said that Europe is turning the corner from recession. But she described that recovery as uneven with some European nations still burdened by high debt and credit restraints. She said the European Central Bank could do more to help the recovery by providing targeted lending.

For big emerging economies such as China, Lagarde said financial regulation needed to be strengthened and officials will need to be alert for any threats such as asset bubbles.

"Now that the global economy looks more stable, the big priority for policymakers in 2014 is to fortify the feeble global recovery," she said.

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