‘Beware Complacency,’ World Not Yet In Post-Crisis Era—IMF Chief
“We must beware of complacency. Certainly the recovery is getting stronger, but everybody can understand that it’s not the recovery we want because it’s unbalanced between countries and it’s also unbalanced within countries. That’s the reason why uncertainty is still very high,” Strauss-Kahn told a news conference.
He said the consequences of the global economic and financial crisis are still very apparent. “The apex of the crisis is behind us, but it would be part of the complacency I am trying to avoid to believe that we are in the post-crisis era.”
‘Jobs, jobs, jobs’
Recovery would mean little to people around the world if it showed up in macroeconomic data that did not translate into jobs, Strauss-Kahn said. He recalled that, a year ago he was concerned about the possibility of a recovery without jobs. “It’s probably too much to say that we have a jobless recovery. It’s certainly a recovery, but without enough jobs. So the question now is jobs, jobs, jobs.”
Strauss-Kahn noted that the key IMF publications World Economic Outlook, Global Financial Stability Report, and Fiscal Monitor had this week outlined the challenges facing the world economy.
In advanced economies unemployment is still high, and there remain fiscal and financial vulnerabilities. Some emerging market economies face the risk of overheating, and many low-income countries confront the threat of food and fuel prices rising to high levels last seen in 2008.
For advanced economies, urgent action was needed on
• Financial sector repair and reform: bank stress tests need to be linked to some form of recapitalization, on extending supervision to the shadow banking sector, dealing with systemically important financial institutions, implementing the macroprudential framework, cross-border banking resolution, and completing work on possible taxation of the financial sector.
• Sovereign debt: putting fiscal policy on a sustainable path over the medium term is a real concern, and has to be accomplished without hindering the fragile recovery.
Emerging market economies face the question of overheating. Depending on the...
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