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Oil prices could derail recovery, IMF says

March 19, 2012 at 9:40 AM   |   Comments

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BEIJING, March 19 (UPI) -- Rising crude oil prices could erase many of the gains made in the global economy, the head of the International Monetary Fund said.

Crude oil prices have risen steadily this year. The U.S. Energy Department's Energy Information Administration said last week crude oil prices were down modestly for the week but up $7 per barrel compared with the same time last year.

Some economic indicators suggest the global economy is improving, notably employment figures in the United States. The cost of living, however, has increased in part due to rising gasoline prices.

Christine Lagarde, managing director of the International Monetary Fund, said during a speech in Beijing that there were signs of trouble in the global economy.

"The global economy is not yet out of the danger zone," she said. "Financial systems are still fragile, public and private debt is still too high and unemployment is still a major problem."

Western sanctions imposed on Iran are in part to blame for higher oil prices. Saudi Arabia said it was capable of making up for any shortfalls in the crude oil market, though Lagarde said there was cause for concern.

"The rising price of oil is a new threat that could derail the recovery," she said.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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