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While Asia plays a key role in the global recovery, the region could be badly affected if strains in the Euro Zone worsen further, says IMF chief Christine Lagarde during a four-day trip to Asia.

“This (Asian) region clearly continues to propel the global recovery, but, at the same time, if strains in the Euro Zone worsen further, Asia would be negatively impacted through both trade and financial sector channels,” she said in the statement, issued after meetings with Minister of Finance Jun Azumi and the Bank of Japan Governor Masaaki Shirakawa.

“The rise of Asia in the global economy is really the defining economic success story of modern times. And so today, it is no surprise that Asia is propelling the global recovery. In all of this, China is very much a leader,” she said.

During her Beijing speech, Lagarde warned of bleak consequences if countries failed to cooperate in the cause of global recovery.

“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,” she said.

Lagarde says that greater global interdependence meant cooperation was essential.

“In our increasingly interconnected world, no country or region can go it alone. We are bound together by our economic success—or failure,” stressed Lagarde.
 

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