Global economic recovery still fragile: IMF
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The global economic recovery remains "fragile," with uneven growth rates in different parts of the world, but a double-dip recession is unlikely, said Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), on Thursday.
"Growth is coming, but not enough," he said, adding that more jobs need to be created and more efforts should be made to facilitate the financial sector reform.
The Washington-based agency announced on Monday that it would require 25 major economies with financial sectors that have the greatest impact on global financial stability to go through in- depth mandatory financial stability exams every five years to prevent possible global financial turmoil.
Central bankers and finance ministers from around the world are gathering here in Washington to attend the IMF and its sibling financial institution the World Bank's 2010 annual meetings this week.
The IMF chief noted that emerging market economies should have a bigger voice in the IMF, but did not specify the "proportion" they could get, adding that "we are doing this" in the near term.
He told reporters last week that he didn't "see global problems, " and that China, other Asian as well as Latin American economies were doing well. One of the main concerns is that some European economies did not bounce back quick enough.
In the World Economy Outlook report released on Wednesday, the IMF projected that world economy will grow by 4.8 percent and 4.2 percent in 2010 and 2011, respectively.
"Most advanced economies and a few emerging economies still face large adjustments," said the new report. "Their recoveries are proceeding at a sluggish pace, and high unemployment poses major social challenges."
The advanced economies are expected to expand by 2.7 percent this year, and by 2.2 percent in 2011, following a decline in output of 3.2 percent in 2009.
By contrast, many emerging and developing economies are again seeing strong growth, because they did not experience major financial excesses just prior to the Great Recession.
Growth in emerging and developing economies is projected to be over 7.1 percent and 6.4 in 2011, following a modest 2.5-percent gain in 2009.
As for global cooperation, which is considered fading recently, Strauss-Kahn said that the trend is regrettable.
"I think it's fair to say that momentum is not vanishing but decreasing and that's a real threat," he warned. "Everybody has to keep in mind this mantra that there is no domestic solution to a global crisis."
Although the world economic situation is challenging and the downside risk elevated, "we do not believe there will be a double- dip recession," he added.
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