Global recovery fragile, uneven: IMF chief
The global economic recovery is fragile, uneven and beset with great uncertainty, the head of the International Monetary Fund said on Monday.
April 05, 2011 / 12:15 IST
The global economic recovery is fragile, uneven and beset with great uncertainty, the head of the International Monetary Fund said on Monday.
In a speech to preview upcoming meetings of global finance chiefs in Washington, IMF Managing Director Dominique Strauss-Kahn said central banks need to broaden their focus beyond price stability and looks for ways to keep the financial system stable."Clearly, monetary policy must go beyond price stability, and look to financial stability," Strauss-Kahn said in prepared remarks. "But this does not mean that the main tool of monetary policy, the policy rate, must expand its reach."He said policymakers have to learn to use regulatory tools -- like capital ratios for financial firms -- to help achieve broader-based stability in the global economy."The global economy continues to recover but it is unbalanced between countries and within countries," he said.Strauss-Kahn said it was also necessary to "rethink fiscal policy." Governments around the world spent heavily to prop up economies and financial institutions during the 2007-2009 financial crisis.
European solution
In what is expected to be a major area for discussions at next week's meetings, Strauss-Kahn zeroed in on Europe's ongoing debt crisis, and said more needs to be done and on an urgent basis."Progress has been partial and piecemeal so far, and this is a key risk for the crisis countries as well as for overall recovery in Europe," he said.Strauss-Kahn, who is being closely watched as a possible candidate for the French presidency, said Europe needed leadership as it sought a method for bringing order to its economic woes."Ultimately, Europe needs a comprehensive solution -- based on pan-European solidarity -- to deal with lingering financial sector and sovereign debt problems," he said.Turning to another global trouble spot, he said addressing the turmoil in the Middle East would require far-reaching changes in political, economic and social institutions.But he warned that efforts to address the region's problems would take time and could be complicated by spending pressures to address higher food and fuel prices."The immediate challenge is to preserve social cohesion without undermining macroeconomic stability," Strauss-Kahn said.He said a drop in tourism and foreign direct investment in countries struggling with political instability could derail efforts to move toward socially inclusive growth and create much needed jobs throughout the region."The international community must stand ready to help, now and in the years to come," he said. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
