The global economy should recover from recession in the first half of 2010, but it will take time for unemployment levels to decline, International Monetary Fund Managing Director Dominique Strauss-Kahn said.
In a transcript of an interview conducted by an IMF staffer which was published on Friday, Strauss-Kahn said recovery could happen even sooner, citing what he described as good recent economic figures.
But if we have in mind that the global economy will only fully recover when unemployment goes down, then it will take more time. Because as everybody knows, there is some delay between the time when growth comes back and the time when the employment situation improves, he said.
The IMF expects unemployment to continue rising through next year as economic growth falls short of potential. Economic data from countries such as the United States have been relatively upbeat and pointed to a recovery taking form.
Strauss-Kahn said while much progress had been made in pushing for tighter financial markets regulation, more still needed to be done. Lack of stricter monitoring of financial markets is blamed for the worst crisis since the 1930s.
A lot has been done analyzing the causes of the crisis, and trying to find solutions. Now, to get from here to establishing new regulations and implementing reforms in each and every country, there are a lot of things still to do, he said.
Everybody understands that, 18 months after the beginning of the crisis, we still haven't fixed the lack of regulation -- not only in terms of compensation but in other areas as well.
Strauss-Kahn said the IMF and World Bank annual meetings in Istanbul, Turkey, next month would focus on post-crisis policies and new sources of growth.
Now is not the time to implement exit strategies. But we have to discuss them, bearing in mind that the global economy will not be the same after the crisis. It will be a different kind of economy -- maybe with fewer imbalances, but less growth, he said.
Global central banks, including the U.S. Federal Reserve, have pumped billions of dollars into financial markets to free up the flow of credit and governments have stepped in with spending packages to support fractured economies.
Amid signs of recovery, debate has been simmering on whether monetary authorities should start withdrawing some of the support to prevent inflation. Strauss-Kahn said the IMF could help member countries coordinate policies, even in the absence of consensus.
In Istanbul, we want to show that if we want to avoid other crisis like this one, we need economic cooperation of this kind, he said.
The IMF chief acknowledged that the Fund had not been as good as we should have been in terms of warning early about the risks of crisis. We're working very hard on this and are reshaping our surveillance to