US debt crisis could destabilize global economy: IMF
The International Monetary Fund has warned the US that its impending debt crisis could damage not only its domestic economy, but the entire global economy.
IMF called it “mission-critical” and called for it to be resolved soon. According to IMF Chief Christine Lagarde:
- US must take corrective measures that do not hurt the recovery. At the same time, the US needs to do more to make debt sustainable by containing the growth of entitlement spending and raising revenues.
- Japan also needs a credible plan to curtail its debt, which is approaching 250% of GDP and amounts to about USD90,000 for every man, woman, and child in Japan.
- The fiscal and financial efforts must be complemented by structural reforms – to make sure that policies to boost demand are supported by policies to boost supply.
- Increasing female participation in the labour force in Japan to match the G7 average would boost its per capita GDP by 4% by 2030.
- As G7 group of nations accounts for about 40% of world GDP, events in these regions has profound implications for the rest of the world. This calls for engagement at international level.