Euro unlikely to ‘vanish’ this year – IMF chief

The euro is unlikely to “vanish” this year, IMF chief Christine Lagarde said yesterday, but warned a report this month will show the global economy growing slower than the four per cent estimated in September.

“Will 2012 be the end of the euro currency? My answer is I dont think so,” she told a press conference during a visit to South Africa.

“It’s a young currency, it’s a solid one as well. You have, within the zone, not in relation with the currency, serious pressures and issues concerning the sovereign debt, concerning the strength of the banking system, but the currency itself is not one that would vanish or disappear in 2012.”

“Will Greece quit the eurozone in 2012? The euro partners have affirmed, reaffirmed, and reaffirmed their determination. We can only support that,” she said.

But she warned that the crisis was taking a toll on Africa and the rest of the world, with the International Monetary Fund set to release a report around January 25 that is likely to lower the global growth forecast.

“We are currently revisiting our world forecast,” she said. “It is very likely to be revised downwards”.

“We should clearly prepare for a 2012 that will not be a walk in the park, that will not be an easy journey, but will be one of effort and focus on a combination of issues – the first one, the European crisis and its resolution.”

“African countries are a critical part of the global economy,” she added, in a nod to her hosts.

“These countries will suffer setbacks if the Europe crisis is not addressed successfully,” she said, after a meeting with South African Finance Minister Pravin Gordhan.

“The IMF is going to be particularly vigilant in respect of anything that looks like financial protectionism,” she said.

“We’ll join forces with other international institutions to make sure we continue to avoid domestic protection, countries not being concerned by the rest of the world, and not adopting the international cooperative approach, which in our view is absolutely necessary to deal with the current situation.”