International Monetary Fund chief Christine Lagarde warned yesterday that the world could see demand evaporate if the United States and Europe fail to put their ailing economies back on track.

“Today, if there is no collective rapid action we run the risk of losing the battle for growth,” Ms Lagarde said in a speech at the opening session of the IMF and World Bank annual meetings in Washington.

“There are dark clouds over Europe and there is huge uncertainty in the United States and, with that, we could risk the collapse in global demand.”

“Well, so what? Let’s remove the clouds and remove the uncertainty! Easier said than done, and it requires clearly a collective action,” she said.

Meanwhile, British Chancellor of the Exchequer George Osborne warned eurozone countries have just six weeks to devise a long-promised solution to the debt crisis.

Mr Osborne said a meeting of the G20 nations in France in November remained the deadline for action to tackle the crippling crisis.

Speaking after meeting with fellow finance ministers from the group of developed and developing nations, he said there was a recognition of the need for urgency.

Ms Lagarde, a former French finance minister and, since her appointment in July, the first woman to head the IMF, called on the Fund’s 187 member nations to put economic growth and job creation at the top of their priorities.

“What we want for our countries is inclusive, job-creating growth.”

But she warned that downside risks on the horizon were “piling up”. Those risks were being driven by a negative feedback loop between weak growth, weak balance sheets of sovereigns, banks, and households and “what is very much perceived as inefficient political commitment,” particularly by the markets, she said.

She recalled that the international community had acted together to face the 2008 financial crisis.

“We need to act now and we need to act together,” she said. “Our problems can be largely economic, but the solutions are essentially political solutions.”

Ms Lagarde singled out the US nd Europe as primarily responsible for the current crisis. The US, the world’s largest economy, needs to reduce its fiscal deficit, reduce high unemployment and help relieve pressure on overly indebted households, she said.