MercoPress. South Atlantic News Agency

IMF chiefs rules out double-dip recession, praises South American countries

Strauss-Khan: if US economy stalls, consequences could be dramatic

IMF Managing Director Dominique Strauss-Kahn ruled out any possibility of an impending double-dip recession even as he warned against downward risks posing the countries while they were recuperating, albeit languidly.

“We need to sustain the global recovery. We don’t believe at the IMF that the double dip is the most probable forecast but it is a possible tail risk,” Strauss-Kahn said on Thursday in India, adding that the global recovery was “fragile and uneven”.

“Growth in Brazil, Chile and Peru is good. In parts of the world, in Asia, South America and parts of Africa, growth is going well.”

The IMF chief also underscored the need to learn “some hard lessons” from the economic crisis. Stressing the fact that while IMF is not a commercial bank, he said the institution was always eager to provide financial and technical support when needed.

“IMF is responding to its membership. We are answering to the request by the members. When some members want some support (technical support, financial support) we are of course happy to do it. We are not a commercial bank. We are not knocking at doors saying we should provide you some loans” he said addressing business leaders in New Delhi.

On the recent state of Ireland, which was the second country in Europe to seek for a bailout package after Greece, Strauss-Kahn said it was the banking sector which was responsible for the Irish economy cave-in. However, he said it would recover rapidly.

Recently, the EU governments approved a Euro 85-billion bailout package for Ireland to strengthen its banking sector and help finance its debt.

Strauss-Khan said that while the recovery in Europe remained helplessly sluggish, on the other hand, there was also a high risk of debt facing some of the European countries. So, he said, the entire European nations had to deal with fiscal consolidation and need to reinstate confidence in their public finances.

He also underscored the need for the US economy to grow fast and in a robust manner, otherwise consequences would be dramatic. “If growth stalls in the US, the consequences for the rest of the world will be huge.”

Strauss-Kahn also candidly handled questions related to the Chinese currency manipulation. “During the crisis, the way the Chinese authorities decided to put in place the stimulus was to revise the shift from an international-led model to a domestic-led model.”