Business | Economy
IMF chief sees no global recovery this year
The International Monetary Fund (IMF) does not expect the global economy to recover before 2009 even though a "large part" of the financial crisis may be over, its chief Dominique Strauss-Kahn said on Wednesday.
- Reuters
- Published: 00:33 May 15, 2008
- Dominique Strauss-Kahn, IMF managing director, said robust emerging markets such as China, India and Brazil were underpinning the global economy.
- Image Credit: Bloomberg News
Occuppied Jerusalem: The International Monetary Fund (IMF) does not expect the global economy to recover before 2009 even though a "large part" of the financial crisis may be over, its chief Dominique Strauss-Kahn said on Wednesday.
"It's too early to know if the financial crisis is really behind us," Strauss-Kahn told a conference in Occupied Jerusalem to mark 60 years since the founding of Israel in 1948.
"Probably a large part of the financial crisis is behind us, but it is difficult to know if everything is behind us," he said. "How long will the slowdown last? I don't see a recovery before 2009."
Strauss-Kahn noted that robust emerging markets such as China, India and Brazil were underpinning the global economy, despite a crisis that started in the US subprime mortgage sector - a problem he said persisted.
Along with the US housing crisis, one of the biggest issues facing policymakers was imbalances between global currencies, with some undervalued and some overvalued. He did not give specifics.
Rising oil, commodity and food prices also remained a drag on the global economy, he said.
European equity markets firmed and the dollar rose broadly on Wednesday as worries about US economic growth eased on the back of better-than-expected US retail sales data and attention turned to inflationary pressures.
Goldman Sachs senior global strategist Abby Joseph Cohen echoed Strauss-Kahn's caution, saying "the pain is not over" for the US economy. However, she said she expected the US economy to stabilise in the second half and to register growth in 2009.
"Over the next few months economic data in the US will show signs of stability, and we think that in 2009 we will have a year of economic growth," she said. "It won't be four per cent... but there will be a plus sign in front of it."
Cohen said predicting the impact on financial markets was a tougher task. She said there were signs that market volatility had eased, that the global appetite for risk was starting to recover and that US equity and corporate bond markets were behaving "more normally".
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