Speaking before the U.S. Chamber of Commerce, Christine Lagarde, managing director of the International Monetary Fund (IMF), gave a preview of the IMF's global economic forecast, to be released in two weeks, and spoke to the key role the U.S. economy plays in the global marketplace.
The IMF sees increased, but "subdued" global economic growth, being lead by emerging markets. However, Legarde pointed out that emerging markets were slowing down, particularly due to concerns over monetary policy. As for the U.S. economy, she said the fundamentals were increasing and she expected to see stronger growth next year, though current growth was still below 2%.
In the light of ongoing fiscal battles, IMF Director Lagarde offered advice to U.S. policy makers. She encouraged them to "fix public finances" by slowing the fiscal contraction caused by sequestration and speeding up entitlement reform. She also called for a cautious "exit" from unconventional monetary policies and asked policy makers to "finish reforming the financial sector."
Finally, Director Lagarde noted the global connectedness of the U.S. economy to world commerce, and reminded the audience that the collapse of one American bank revealed weaknesses in the global finance system.
At the end of her speech, Lagarde took questions from the audience regarding China's membership in the IMF, "fads" in global growth and the importance of financial inclusion, or the participation of all levels of society into national economies.
Before taking on her current position, Lagarde served as France’s finance minister from 2007-11.