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IMF warns on austerity and social consequences

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On the heels of Joseph Stiglitz's warning, Christine Lagarde's IMF is now raising similar concerns.

Expressing concern about the weakness of economic activity and rising unemployment, the IMF's Christine Lagarde, the World Bank's Robert Zoellick and the WTO's Pascal Lamy joined the heads of eight other multilateral and regional institutions in calling for policies to create jobs, tackle inequality and green the global economy. "The world faces significant and urgent challenges that weigh heavily on prospects for future growth and on the cohesion of our societies," said the statement by the global issues group of the World Economic Forum. It was published ahead of the forum's annual meeting in Davos next week, amid concerns that 2012 will see the global economy flirt with recession as a result of the eurozone crisis. "Our shared objective is the strengthening of growth, employment and the quality of life in every part of the world," said the statement. "But entering 2012, we worry about: decelerating global growth and rising uncertainty; high unemployment, especially youth unemployment, with all its negative economic and social consequences; potential resort to inward-looking protectionist policies."
Youth unemployment is a major problem during this recession, as some countries (Spain comes to mind immediately) are easily looking at a lost generation. A lot more needs to be done but with social programs being cut to the bone, there's little room for assistance.

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