Global Recovery Seems Stronger, But Still Fragile, Says IMF

While emerging market economies-especially in Asia-were leading the recovery, most advanced economies were still sluggish, with private demand weak and joblessness continuing to rise, he told reporters.

"We are not out of the woods until the private sector has recovered," Strauss-Kahn said at a January 14 news conference in Washington that he started by conveying deep sympathies to the people of Haiti following the severe earthquake. The Managing Director announced the Fund would provide $100 million to Haiti very rapidly in emergency help and would coordinate with other agencies to come up with a larger assistance package in due course.

Multi-speed recovery

On the global economy, Strauss-Kahn said he expected to see countries around the world recovering at different speeds in the various regions. He urged governments not to relax stimulus measures too early in the mistaken belief that a strong recovery had taken hold, and suggested that they could shift stimulus measures toward projects that would create additional jobs.

The IMF is scheduled to release its update on the global outlook on January 26.

Breaking down what had happened during the past two years of crisis and looking ahead to 2010, he said this year must be a year of transformation, to complete the reshaping of the global financial and regulatory system.

- 2008 was a year of humility: "our confidence in markets, institutions, and the status quo turned out to be complacency; we learned how fallible, fragile, and interconnected we are."

- 2009 was a year of unity: "the world pulled together to respond to a profound economic-and potentially human-calamity, and redeemed the promise of international cooperation."

- 2010 must be a year of transformation-"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.

There was a risk, he said that momentum for reforming the financial sector could be lost and policymakers should not forget the roots of the crisis. He welcomed a proposal by U.S. President Barack Obama that major U.S. financial firms pay a fee to help the government recover losses from the financial crisis, saying this showed that the world’s biggest economy was prepared to...