WASHINGTON: International Monetary Fund chief Christine Lagarde warned Thursday that "the risks remain high, the situation fragile" in the world economy, despite actions taken in recent months to stem the debt crisis in the eurozone. She said that "important actions," primarily in Europe, had brought "some improvement in the economic climate." The European Union's action to strengthen its bailout fund as a financial firewall had been "crucial."
Last week, though, fiscally stretched Italy and Spain saw their borrowing costs surge as investors again became skittish. "Events of the past week remind us that markets remain volatile and that turning the corner is never easy," Lagarde said in a speech to the Brookings Institution, a Washington-based think tank. "Clearly, the risk that looms largest is that sovereign and financial stresses return with renewed force in Europe," she said.
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