[W]e also are seeing the emergence of a three speed global economy, those countries that are doing well, those countries that are on the mend, and those countries that still have quite a distance to travel.

Now, with strong interconnections, and uneven recovery, that three-speed recovery is not the healthiest recovery we could think of. The three-speed recovery is not enough and what we need is a full-speed global economy–growth that is solid, sustainable, balanced, but also inclusive and very much rooted in green developments.

This requires for the global economy to move from that three-speed recovery that we are observing to a full-speed recovery, with the kind of growth that we want, that requires clearly customized policy responses in each of the three groups that I have just identified. Those that are doing well, those on the mend, and those that still have a way to go.

If we look at the first speed, the first group–the emerging markets and the developing economies. Emerging markets face the new risk of avoiding financial excesses. They should rebuild policy space and strengthen financial regulation and supervision. Low-income countries, and in that group you really observe probably the fastest growth rates at the moment, they should build on success and invest in the future, including by meeting infrastructure and social needs. And that is where the inclusive growth really kicks in. It doesn’t only apply to that group, but it is very needed in that particular group. The international community, of course, needs to support these countries in addressing these challenges.

The second group includes the United States, but also countries like Sweden, Switzerland, for instance. If we look at the United States, it has managed to avoid the fiscal cliff—much talked about until January 1st. It still needs, however, to fix the pace of its fiscal adjustment–less and better-quality adjustment now, well-planned, well-anchored, well-communicated for the future. This would certainly support the recovery in private demand. Not to say that there is no recovery in private demand at the moment. It is clearly picking up, but it would certainly comfort it and would make it stronger for the long run.

The third group includes the euro area and Japan. Japan is in a space of its own in a way, but we have put it in that group for the moment. On the euro area, policy makers have accomplished a great deal over a short period of time. The priority now is to fix frayed banking systems, and press ahead with banking union…”

In its latest World Economic Outlook, unveiled in Tokyo ahead of the IMF-World Bank 2012 Annual Meetings, the IMF said advanced economies are projected to grow by 1.3 percent this year, compared with 1.6 percent last year and 3.0 percent in 2010, with public spending cutbacks and the still-weak financial system weighing on prospects.

Growth in emerging market and developing economies was marked down compared with forecasts in July and April to 5.3 percent, against 6.2 percent last year. Leading emerging markets such as China, India, Russia, and Brazil will all see slower growth. Growth in the volume of world trade is projected to slump to 3.2 percent this year from 5.8 percent last year and 12.6 percent in 2010.

“Low growth and uncertainty in advanced economies are affecting emerging market and developing economies through both trade and financial channels, adding to homegrown weaknesses,” said IMF Chief Economist Olivier Blanchard.

The IMF said that its forecast rested on two crucial policy assumptions—that European policymakers get the euro area crisis under control and that policymakers in the United States take action of tackle the “fiscal cliff” and do not allow automatic tax increases and spending cuts to take effect. Failure to act on either issue would make growth prospects far worse.

The forecast said that monetary policy in advanced economies was expected to remain supportive. Major central banks have recently launched new programs to buy bonds and keep interest rates low. But the global financial system remains fragile and efforts in advanced economies to rein in budgetary spending, while necessary, have slowed a recovery.