WASHINGTON Feb 25 Rising inequality can damage
economic growth and social ties, and may also cause political
instability, the head of the International Monetary Fund warned
in a speech on Tuesday.
IMF Managing Director Christine Lagarde sounded the trumpet
on rising income disparities for the second time this month, in
a speech at Stanford University, after also broaching the issue
during a lecture at the BBC.
"Rising inequality and economic exclusion can have
pernicious effects," she said, according to prepared remarks,
pointing to IMF research that shows income gaps can lead to
slower and less sustainable growth.
"In the years ahead, it will no longer be enough to look
simply at economic growth," she said. "We will need to ask if
this growth is inclusive."
Lagarde's recent speeches have sought to put the IMF at the
forefront of some of the biggest global debates, including on
inequality, gender and climate change.
The World Economic Forum (WEF) also warned this month that
the chronic gap between rich and poor is getting wider, posing
the single biggest risk to the world this year. Extreme weather
events were the second most likely factor to cause systemic
shocks, according to a WEF survey.
Lagarde said technology may be contributing to rising income
disparities, and called for better education to prepare people
to deal with a rapidly changing interconnected world.
She also said the world needs to focus on a
"multilateralism" where all countries feel responsible for
solving global problems.
"The good news is that we already have some key institutions
of multilateralism at our disposal," she said. "Think about the
IMF, for example."