US, Europe to address serious threats to global economy

US and European lawmakers need to address "serious threats" to save the global economy from sinking further under high debt and unemployment, IMF chief Christine Lagarde said late Monday. The eurozone debt crisis in Europe, a developing slowdown in Asia, and US fiscal cliff have triggered fresh worries about the pace of the global recovery, prompting the International Monetary Fund to cut its forecast for global growth. "We continue to project a gradual recovery, but global growth will likely be a bit weaker than we had anticipated even in July, and our forecast has trended downward over the last 12 months," IMF Managing Director Lagarde said in an address at the Peterson Institute for International Economics in advance of IMF meetings in Japan next month. In July, the IMF cut its global growth projection for 2013 to 3.9 percent but left its 2012 forecast at 3.5 percent. Lagarde said the euro zone debt crisis posed the greatest risk to the world economy but that the US fiscal cliff also presented a "serious threat." The uncertainty over whether officials would effectively address those main trouble spots was now affecting economies in the rest of the world, she said. Lagarde said emerging market economies were now clearly slowing and there was "great concern" in poor countries about rising food prices and volatile commodity prices. There were also signs of growing frustrations with political transitions in the Middle East, she added. Recent action by major central banks have helped buoy growth and provided "an opportunity to make a decisive turn in the crisis," she said. "But we should not get ahead of ourselves. The global economy is still fraught with uncertainty, still far from where it needs to be." In the United States, the automatic budget cuts slated for next year if Congress and the Obama administration do not agree on an alternative could put the country back in recession, the IMF has warned. Though no agreement is expected before the November presidential election, "we all hope that political clarity emerges soon, and with it actions to avoid the fiscal cliff, " Lagarde said.