IMF chief sees signs of early recovery
By Mike Peacock |
September 9, 2009, Wednesday
|
Print Edition
Print Edition
ECONOMIC recovery may come three months earlier than forecast, the head of the International Monetary Fund has said, but policy makers warned it may not last if governments reversed stimulus programs too early.
"For the economy, we have been saying for a year that the recovery will come in the first half of 2010. It might even be a quarter ahead," IMF Managing Director Dominique Strauss-Kahn told Il Sole 24 Ore newspaper.
"We are seeing the end of the tunnel, but we are still in crisis," he said.
Generally upbeat data from Germany, France and Britain yesterday added fuel to the recovery debate, which has sent stocks soaring since March as fears raised by the bankruptcy of Lehman Brothers a year ago proved to be unfounded.
Emerging markets shares hit a new year high, rising to levels last seen before the Lehman collapse, and world stocks in general headed toward a new 2009 peak.
Too optimistic
But government and central banks were cautious.
A senior member of the European Central Bank said markets might be reacting too optimistically to recent data.
"An over-reaction to this data is not good, because it could make us forget that governments still face a very significant agenda of reforms. And without completing those reforms we won't return to sustainable paths of growth," ECB Executive Board Member Manuel Gonzalez-Paramo told Spain's Expansion newspaper.
In China, a senior Cabinet official said the economy was stronger but recovery was still not solid.
State Councillor Ma Kai said China would continue to implement its policies to stimulate growth, which have included a 4 trillion yuan fiscal spending package, tax incentives and an "appropriately loose" monetary policy.
Finance ministers from the G20 economies agreed at the weekend that now was no time to reverse the trillions of dollars of stimulus pumped into the world economy. They say they are waiting for when recovery is established.
The Bank of France said yesterday that the French economy is expected to grow by 0.3 percent in the third quarter while German exports increased for a third month running in July.
In Britain, manufacturing output rose at its fastest rate in 18 months in July.
"For the economy, we have been saying for a year that the recovery will come in the first half of 2010. It might even be a quarter ahead," IMF Managing Director Dominique Strauss-Kahn told Il Sole 24 Ore newspaper.
"We are seeing the end of the tunnel, but we are still in crisis," he said.
Generally upbeat data from Germany, France and Britain yesterday added fuel to the recovery debate, which has sent stocks soaring since March as fears raised by the bankruptcy of Lehman Brothers a year ago proved to be unfounded.
Emerging markets shares hit a new year high, rising to levels last seen before the Lehman collapse, and world stocks in general headed toward a new 2009 peak.
Too optimistic
But government and central banks were cautious.
A senior member of the European Central Bank said markets might be reacting too optimistically to recent data.
"An over-reaction to this data is not good, because it could make us forget that governments still face a very significant agenda of reforms. And without completing those reforms we won't return to sustainable paths of growth," ECB Executive Board Member Manuel Gonzalez-Paramo told Spain's Expansion newspaper.
In China, a senior Cabinet official said the economy was stronger but recovery was still not solid.
State Councillor Ma Kai said China would continue to implement its policies to stimulate growth, which have included a 4 trillion yuan fiscal spending package, tax incentives and an "appropriately loose" monetary policy.
Finance ministers from the G20 economies agreed at the weekend that now was no time to reverse the trillions of dollars of stimulus pumped into the world economy. They say they are waiting for when recovery is established.
The Bank of France said yesterday that the French economy is expected to grow by 0.3 percent in the third quarter while German exports increased for a third month running in July.
In Britain, manufacturing output rose at its fastest rate in 18 months in July.
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