Open

Coming up

Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Renault's women drivers ad deemed sexist

Read more

THE OBSERVERS

A look back on some of the Observers' best stories

Read more

DEBATE

Iraq's Christians: Nowhere to Run? (part 2)

Read more

DEBATE

Iraq's Christians: Nowhere to Run?

Read more

BUSINESS DAILY

France's Iliad reaches for T-Mobile

Read more

AFRICA NEWS

Ebola death toll tops 700

Read more

IN THE PAPERS

Is Poor Military Training Causing a Larger Death Toll in Gaza?

Read more

IN THE PAPERS

Villepin Criticises France for Not Speaking Out on Gaza

Read more

MEDIAWATCH

UNRWA official breaks down over Gaza deaths

Read more

  • Live: Israeli soldier feared captured, ceasefire 'over'

    Read more

  • Regional summit to tackle deadly Ebola outbreak

    Read more

  • €2.5 million in cocaine ‘disappears’ from Paris police HQ

    Read more

  • Interactive: France’s new plan to counter jihadism in Africa

    Read more

  • Ukrainian army suffers losses in separatist attack

    Read more

  • Dozens killed and injured in Taiwan gas blast

    Read more

  • Argentinian markets plummet following default

    Read more

  • French Jews speak of growing fear in Paris amid Gaza conflict

    Read more

  • Video: Inside Hamas ‘terror’ tunnels in Gaza

    Read more

  • Sierra Leone declares state of emergency over spread of Ebola

    Read more

  • France remembers murdered socialist hero Jean Jaurès

    Read more

  • Air France ground workers to strike on August 2

    Read more

  • Scores feared dead in India landslide

    Read more

  • Russia ordered to pay further €1.9bn to Yukos shareholders

    Read more

  • Russia defiant as US, EU unveil 'phase three' sanctions

    Read more

Business

Global recovery has begun, says IMF's chief economist

Text by NEWS WIRES

Latest update : 2009-08-18

The International Monetary Fund's chief economist, Olivier Blanchard, said that the global recovery from recession has begun but countries will need to rebalance their economies to make sure it is sustainable.

Reuters - The global economic recovery has begun but sustaining it will require refocusing the United States toward exports and Asia toward imports, the International Monetary Fund's chief economist said.

 

In an article released by the IMF on Tuesday, Olivier Blanchard also said potential economic output may be lower than it was before the financial crisis struck.

 

"The turnaround will not be simple," Blanchard said. "The crisis has left deep scars, which will affect both supply and demand for many years to come."

 

He said U.S. consumption, which accounts for about 70 percent of the U.S. economy and a large chunk of global demand, would not quickly return to pre-crisis strength as households cope with trillions of dollars in losses from the falling housing and stock markets.

 

He said the financial crisis had made Americans more conscious of "tail risks" -- events that are unlikely to occur, but when they do have devastating consequences.

 

That means U.S. consumers are unlikely to return to their free-spending ways, and both the United States and its trading partners will have to adjust. Emerging Asian countries, especially China, must play a big role.

 

"From the point of view of the United States, a decrease in China's current account surplus would help increase demand and sustain the U.S. recovery," he said. "That would result in more U.S. imports which would help sustain world recovery."

 

But in order for China to boost domestic demand, it will need to provide a stronger social safety net and increase household access to credit, which will encourage its consumers to save less and spend more.

 

"Both higher Chinese import demand and a higher (yuan) will increase U.S. net exports," he said.

Date created : 2009-08-18

COMMENT(S)