Your Black Money: IMF Chief Says Economic Crisis is Complex, Slow to Recover

20 Aug

Olivier Blanchard, the IMF’s chief economist

August 19, 2009

(RFE/RL) — According to a new report by the International Monetary Fund (IMF), the world has begun to recover from recession but the process will not be simple. And sustaining any recovery will require refocusing the United States toward exports and Asia toward imports.
The IMF’s chief economist, Olivier Blanchard, says the global recession had "left deep scars, which will affect both supply and demand for many years to come."
In a study released this week by the IMF, Blanchard describes the current economic difficulties as not a “run-of-the-mill recession.” He notes that models used to understand past recessions cannot be applied to this economic slowdown. 
Blanchard writes that there are two elements central to a sustained global economic recovery.
First, economies must move beyond their dependence on fiscal stimulus by national governments and inventory building by private firms. Such expenditures must sooner or later come to an end.
Second, international trade patterns should be rebalanced. The United States must export more and Asia must import more. This sought-for equilibrium would lower the enormous U.S. current-account deficit and the Asian current-account surplus. But rebalancing world trade flows is not going to be easy and will depend on a reordering of consumption patterns.

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