International Monetary Fund chief Christine Lagarde said German Chancellor Angela Merkel is the “unchallenged leader” of the euro area’s largest country and has been pivotal in keeping the 17-nation bloc together.
Merkel, 58, who is running for a third term in September, called for a stepped-up fight against youth unemployment, now more than 50 percent in Greece and Spain, at the European Union summit in Brussels last month. She has been a proponent of tight spending throughout the crisis, and urged Greece to maintain austerity to stay in the euro.
“She is the unchallenged leader of the largest country in the euro zone, and one country that is faring quite well in the crisis,” Lagarde said in an interview on “CBS This Morning” today. “The leader of the largest players calls the shots.”
Merkel “has been key in keeping it together, although sometimes at a pace that some judged a bit too slow,” according to Lagarde.
The euro area must bolster fiscal and economic coordination to escape its slump, said Lagarde, 57, managing director of the Washington-based IMF. She said the biggest risk facing the area is “fatigue” of governments and population at a time when changes must continue.
“I think it will take the Europeans to save themselves,” she said. “There’s been a lot of talk, there’s been a lot of changes and progress, but they need to really get on with it and finish the job.”
Emerging economies are doing well and the U.S. is “picking up a little bit,” Lagarde said, while the IMF is watching to see how federal spending cuts could affect U.S. growth. Meanwhile, she said, growth lags in Europe and Japan.
The European Central Bank last month cut its economic outlook and projected a contraction of 0.5 percent in euro-area gross domestic product this year, more than the 0.3 percent contraction seen three months earlier.
The Brussels-based European Commission in a report today warned of “excessive” risks to the economic health of Slovenia and Spain, calling on both governments to act.
“Get on with the union. Make sure you have banking union, down the road, fiscal union, and that you keep that you keep that currency zone together and solid,” Lagarde said. “I wish it happens.”
The IMF and the World Bank will hold their annual spring meetings in Washington next week.
Lagarde previously served as France’s finance minister. She is the first woman to hold the top IMF job.
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