The U.S. fiscal cliff poses a near-term threat to the global economy, which also needs to get beyond the eurozone crisis, IMF Managing Director Christine Lagarde said in an interview published Friday.
“In the short term, there is the issue of the fiscal cliff, which is a combination of fiscal cuts that will stop early in 2013 and public spending that will be withdrawn in 2013, if nothing happens,” Lagarde said in an interview with the in-house IMF Survey online publication.
The U.S. fiscal cuts “will be automatic, and it will create a major contraction of the deficit, yes, but also of growth, which would be a threat to the global economy,” she said in comments previewing a speech scheduled for Sept. 24 which itself is designed to be a preview of the goals of the IMF annual meeting in Tokyo Oct. 9-14.
But beyond the short-term threat, Lagarde cautioned that “In the longer term, there has to be again anchoring of expectations about the fiscal policy of the United States in order to address the issue of the deficit and the debt as well.”
via Deutsche Boerse.