BASSETERRE, St. Kitts – RECOVERY in the global economy is taking place faster than anticipated, but stimulus measures will be critical in ensuring sustainable growth for many fragile economies.
This is according to Managing Director of the International Monetary Fund (IMF) Dominique Strauss-Kahn, who reported that weakened private demand and continued joblessness have caused recovery efforts to be sluggish in emerging market economies.
While most countries may be claiming recovery in early 2010, Strauss-Kahn cautioned that countries are expected to recover at different speeds. He therefore encouraged governments “not to relax stimulus measures too early in the mistaken belief that a strong recovery had taken hold”. Rather they could shift stimulus measures toward projects that would create additional jobs, he suggested.
“We are not out of the woods until the private sector has recovered,” Strauss-Kahn added.
According to the IMF, 2008 was a “year of humility” as economies the world over learned how fragile their institutions and sectors are. This lead to the “year of unity” in 2009 as the international community responded with harmonious policies to lend assistance as needed.
Strauss-Kahn has described 2010 as the “year of transformation” where all stakeholders now have to strengthen their financial and regulatory systems.
“We must complete the global project to address the failings in regulation, economic policy, and governance that lay behind the crisis. Regulation and financial sector supervision needed to be not just stronger but smarter. The aim was not to impose additional layers of regulation,” Strauss-Kahn quoted in an IMF release.
In this light, the IMF official outlined the organisation’s four priorities for 2010. Focus will be placed on economic regeneration, not only to prompt economic activity but also to promote sustainable growth.
The 2010 priorities include making a sustainable recovery of output and employment, improving its financing packages to help member countries continue recovery programmes, modernizing financial sector regulation to identify and address economic risks and continuing to improve the governance structure of the IMF itself.
The IMF is expected to produce an update on the global outlook on January 26.
