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The International Monetary Fund (IMF) chief Dominique Strauss-Kahn said that the global recovery is occurring faster and stronger than expected as China and other Asian economies lead the way. However, cautioned that a surge in money to emerging markets could result in asset bubbles.
Strauss-Kahn suggested Monday that the IMF would likely raise its 2010 global growth previously projected at 3.1%, factoring in to account that China, India and other Asian economies growth rates were returning to their pre-crisis growth rates. On the other hand advanced economies such as the U.S. and Japan remained “sluggish”.
The IMF doesn’t foresee a “double-dip,” or second recession, though risks remain, Strauss-Kahn said. He acknowledge that hundreds of billions in stimulus spending by world governments avoided another great depression, but what now concerns the chief is the exit strategy from the policies created by stimulus.
“Now we have to fix the consequences of the policy that has been put in place to fight against the crisis,” he said. “Finding the right time to implement exit policies is really a difficult one.”
“If you exit too late, you waste resources,” he said. “If you exit too early, you have a risk of going back into recession.”
Strauss-Kahn believes many lessons were learned from the financial crisis and one being that supervision must be increase rather than more regulations. “You may have the best regulations in the world, but if it’s not supervised correctly, it’s no use.”
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