IMF cautious about global economic recovery

Acknowledging that the global economy appears to be emerging from the worst financial and economic crisis in the post-war period, the International Monetary Fund Managing Director, Dominique Strauss-Kahn Friday said the recovery will be sluggish and that a jobless recovery remains a risk.

Delivering the 2009 Bundesbank Lecture in Berlin, Strauss Khan argued that the stimulus measures adopted by countries to combat the global crisis should be withdrawn only when the economic recovery has taken hold and unemployment is set to decline.

"I am concerned about the social and economic costs of high unemployment, which will persist even as financial markets and output stabilizes," the IMF Managing Director said. Given the fragility of the recovery, Strauss-Kahn warned that "Policymakers should err on the side of caution as they decide when to exit from their crisis response policies."

However, governments should develop their exit plans now so that they are able to build public support and act when the time is right, he said. Strauss-Kahn underlined that international policy coordination has been an essential part of the response to the crisis and that "coordination of exit strategies will be just as important."