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IMF: Crisis is not the end of the market economy

24 September 2008 13:26 (UTC +04:00)

Baku. Vugar Mustafayev - APA-Economics. The market economy will emerge strengthened from this crisis, said IMF Managing Director Dominique Strauss-Kahn in an interview to Frankfurter Allgemeine Zeitung.
He added that the free market economy needs regulations, a framework to function, and as soon as the immediate danger of a systemic crisis is over, new regulations will strengthen the financial system and thereby the market economy, and reduce the risks of market failures.
He added that the IMF already applauded the U.S. administrationâ€™s bailout plan.
According to him, the financial sector and its importance for the economy will shrink. There is currently a kind of correction of previous excesses: Financial markets and institutions have grown much more rapidly than the economy as a whole. In the U.S., the model of an independent investment bank has failed. Of course, investment banks will continue to exist, but they will be part of universal banks.
He noted that the way it looks at the moment, neither the U.S. nor the global economy will drift into recession. But we see a protracted economic slowdown and even the recovery we expect next year, will be sluggish.