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IMF: U.S. economy likely to show the first signs of revival

20 April 2009 10:05 (UTC +04:00)

Bakuâ€“ APA-Economics. The global economy will emerge from recession in the first half of 2010, but only if banks are "cleansed" of bad assets, the head of the International Monetary Fund said Thursday, reported Dow Jones.
In an interview with the BBC, IMF Managing Director Dominique Strauss-Kahn also said it is difficult to envisage a set of circumstances in which a major developed economy such as the U.K. would have to turn to the fund for financial help.
Earlier Thursday, the IMF released a chapter from its forthcoming World Economic Outlook in which it said that the "the current recession is likely to be unusually long and severe, and the recovery sluggish."
Strauss-Kahn said it is possible that a recovery will start in the first six months of next year, with the U.S. economy likely to show the first signs of a revival, "providing the right policies are implemented."
"You never have had a recovery until you really have cleaned out the balance sheets of the banks," he said.
Strauss-Kahn said that the particular means used to cleanse the banking system of bad assets - whether through nationalization or the creation of a "bad bank" - isn’t important.
"We should not spend too much time discussing, we need to do it now," he said. "We are not going fast enough with the cleansing of the financial sector."
The growing cost of repairing the financial system and providing fiscal stimulus has led to protests in a number of developed economies, including the U.S. Strauss-Kahn said those protests are motivated by "the opposition trying to take advantage" of a difficult economic situation.
"It’s obvious that the stimulus is the right thing to do," he said.
Strauss-kahn said the IMF is satisfied with the combined fiscal stimulus efforts of the leading economies, which he said amounts to roughly 2% of their gross domestic product for this year.
Asked how the fund would respond if approached by the U.K. government for financial assistance, Strauss-Kahn said he thought that was highly unlikely.
"I don’t see any major economy like the U.K. having a need for the IMF," he said. "There are no circumstances under which an advanced economy like the U.K. would need out help."