The head of the International Monetary Fund warned Wednesday that Europe's debt crisis risked plunging the global economy into a “lost decade” and said it was up to rich nations to shoulder the burden of restoring growth and confidence. Christine Lagarde told a financial forum in Beijing that European plans to bolster a rescue package for Greece were a “step in the right direction,” but that the outlook for the world economy remained dangerous and uncertain. “There are clearly clouds on the horizon,” Lagarde said. “Clouds on the horizon particularly in the advanced economies and particularly so in the European Union and the United States.” “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... we could run the risk of what some commentators are already calling the lost decade.” The former French finance minister was speaking at the start of a two-day visit in China. Her meetings are expected to focus on efforts to contain the crisis in Europe, which has seen forced resignations of the prime ministers of Greece and Italy in the past week. Before arriving in Beijing she had spent two days in Moscow, trying to convince Russia to chip in some of its petro dollars to boost bailout funds for the euro zone. European policymakers are hopeful that big emerging economies, led by China, will invest some of their vast foreign exchange reserves in an expanded bailout fund designed to stop the debt crisis that has engulfed Greece and dragged down bigger economies such as Italy.
