Former Treasury Secretary Lawrence Summers said that economic austerity can only further stunt weak global economic growth as nations such as Greece and Puerto Rico cope with potentially fatal debt problems.

“This is not the moment for the greater austerity that one wishes some countries had engaged in five years ago,” he said Wednesday at an IMF event.

“This is the moment for a focus on maintaining the level of demand while at the same time insisting on long-term adjustment,” said Summers, who also was an economic adviser to President Barack Obama and served as Treasury secretary under Bill Clinton.

“The moment for discussion of the accumulation of rainy day (funds) is when it is sunny, not once it has started to rain,” he said, USA Today reported. “And that recognition needs to inform the approach that is taken to a range of emerging and regrettably submerging markets,” said  Summers, now a Harvard professor.

Summers also said the economy “can get worse” if countries don’t embrace infrastructure spending.

Summers spoke only hours after the International Monetary Fund warned that world financial markets have calmed after turmoil earlier this year, but more needs to be done to ensure global financial stability amid slowing growth, weak commodity prices and worries about China's economy.

The IMF said in its latest Global Financial Stability Report that financial system risks have risen since the last report in October and market turmoil could easily recur and intensify if no action is taken to clean up bank balance sheets, particularly in China and Europe, Reuters reported.

"If the growth and inflation outlooks degrade further, the risk of a loss of confidence would rise. In such circumstances, recurrent bouts of financial volatility could interact with balance sheet vulnerabilities," the IMF said in the report.

(Newsmax wire services contributed to this report).

Related Stories

• Larry Summers: Trump Is Biggest Threat to US, Could Spur Crisis
  
• Larry Summers: Low Inflation Is Biggest Challenge for US