IMF chief says world must prepare for next crisis
The world needs to prepare for the next economic crisis, even as it begins to recover from the worst recession since the Great Depression, the head of the International Monetary Fund said Tuesday. IMF Managing Director Dominique Strauss-Kahn, speaking to business students at a Johannesburg university, expressed concern that recovery could mean leaders will feel less pressure to work together and pursue such reforms as tightening regulation and supervision of financial markets. “The consensus is stronger when you’re afraid,” he said. “Certainly this consensus is not as strong as it was six months ago,” Strauss-Kahn said. The former French finance minister said he could not predict the timing or the nature, but “don’t fool ourselves, there will be future crises.” In its most recent World Economic Outlook, the IMF predicted output would grow by 3.1 percent in 2010. But it also cautioned that unemployment would continue to grow. “I won’t say that the crisis is over. I would say we are probably in the second part of the crisis,” he said. Economic stimulus packages adopted around the world, including in South Africa, helped avert a greater crisis, Strauss-Kahn said. While the initial intervention focused on growth, “2010 must be the year where economic policy focuses on job creation,” he said, particularly in the small business sector. On the financial markets, he said a global approach must be found for regulation, and supervision must be strengthened. He said central bankers, international accounting organizations and others were in a better position than the IMF to formulate regulations, but that his agency would play an important role in ensuring that once new rules were adopted, they were followed. After the crisis, politicians will be under pressure to come up with new rules quickly, Strauss-Kahn. But he said it would take time to devise rules that will help instead of hurt, and then time to put them in place properly. Strauss-Kahn is on an African tour that started in Kenya and will take him to Zambia from South Africa. The continent was hard hit by the downturn that began in the West, because it dried up foreign investment, aid and markets for its raw materials such as oil and gold, and affected the amount Africans working abroad were able to send to impoverished families at home. Early in the crisis, there had been fears Africa would be slow to recover, but Strauss-Kahn said the continent appeared to be keeping pace with the global rebound. “One really amazing fact of this crisis is that Africa behaved much better than expected,” he said. A decade of strong growth before the crisis meant African governments had the cash to implement their own stimulus packages. South Africa, which has the continent’s strongest and most diverse economy, lost 900,000 jobs last year on top of already high unemployment. “But the situation could have been much worse,” Strauss-Kahn said. “In South Africa, the right policies have been implemented timely and strongly enough.” Source: http://www.InterMoney.org
