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The
emphasis on investment comes as financial leaders from the Group
of 20 leading economies meet in Turkey to discuss how to help
spur growth, amid signs of slower expansion in the world's
second biggest economy China.
Speaking at a business conference on the sidelines of the G20
finance ministers' meeting, Lagarde said despite financial
sector reform and sovereign bond buying by the European Central
Bank "some of the pipes are still clogged and the flow of credit
has yet to pick up enough to facilitate investment."
"In Europe, there is still today a sizeable amount of
non-performing loans that should be dealt with, moved out of the
healthy circuits, with good management of bad banks...trading of
non-performing loans and improvement of insolvency regimes,"
Lagarde said.
She stressed the importance of investment in infrastructure,
quoting IMF research that investing 1 percent of GDP in
infrastructure in advanced economies increased output by 0.4
percent the same year and by 1.5 percent after four years.
The European Union has launched a 3-year investment scheme worth
315 billion euros ($350 bln) to boost growth, but the ECB still
expects growth in the 19 countries sharing the euro of 1.4
percent this year, below its previous 1.5 percent projection.
It cut its forecast for 2017 to 1.8 percent from 2.0 percent.
(Reporting By Jan Strupczewski; Editing by Nick Tattersall)
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