Ms. Lagarde spoke at the Norwegian central bank in Oslo, where she warned that global economy is struggling to balance, also dealing with the dual shocks of a Chinese slowdown and the collapse in oil prices.
IMF’s Managing Director said Germany should use its healthy public finances to boost spending and also open up closed sectors.
Increasing competition in closed industries and freeing up labor markets has been one of the key demands Germany has put down the throat of fellow member states such as Greece. Now IMF says Germany should follow its own rules.
“Germany could use more of its fiscal space to close domestic investment gaps, and open up its services markets to boost competition. Fiscal and structural reforms will not only lift private investment and long-term growth. They will also help narrow Germany’s large current account surplus” Ms. Lagarde said.