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View Full Version : IMF sees significant downside risks to global recovery



daystar
07-27-2010, 07:41 PM
2010-07-28 07:56:17



http://news.xinhuanet.com/english2010/business/2010-07/28/13418220_21n.jpg
International Monetary Fund (IMF) First Deputy Managing Director John Lipsky speaks at a news conference during the spring IMF-World Bank meeting at the IMF headquarters building in Washington April 24, 2010. (Xinhua/Reuters File Photo)
WASHINGTON, July 27 (Xinhua) --

The global economic recovery is expected to be moderate with significant downside risks, a senior official from the International Monetary Fund (IMF) said on Tuesday.

"Despite recent signs of slowing momentum, the global recovery is expected to continue. Nevertheless, the most likely prospect is for a moderate, multi-speed recovery, with significant downside risks," John Lipsky, First Deputy Managing Director of the IMF said in a speech at the Korea Economic Institute in Washington D.C. .

"While financial markets have improved somewhat in recent weeks, ongoing financial market strains have heightened uncertainty," he noted. "Against this backdrop, the overarching policy challenge is to sustain the recovery while restoring confidence."

Lipsky listed three key policy challenges. First, Policy-makers need "an ambitious and vigorous program" to repair and reform the financial system.
"The recently completed European bank stress tests are receiving particular focus at present, and in general they have made a positive contribution to market sentiment," he said.

According to the findings of the Committee of European Banking Supervisors, only seven European banks failed the tests and only needed to shore up their finances by 4.5 billion dollars.

Second, authorities need to design credible, medium-term fiscal consolidation plans to bolster confidence. Lipsky argued that while most G-20 economies' current fiscal plans appear to be appropriate, countries facing sovereign funding pressures still will require upfront measures to underpin confidence.


Finally, the director stressed the importance of rebalancing the world economy. Economies with both excessive external surpluses and excessive external deficits need to reform their economic structures to achieve more balanced and sustainable growth.

http://news.xinhuanet.com/english2010/business/2010-07/28/c_13418220.htm

glk
07-27-2010, 07:46 PM
Have the Iraqi politicians messed up his long term plans for global recovery ? Thanks for the post daystar ! Still seeing moderate recovery .

GreenEyes
07-31-2010, 07:59 AM
"....countries facing sovereign funding pressures still will require upfront measures to underpin confidence."

I wonder if this alludes to Iraq?

Thanks for the post daystar!

Groovgal
07-31-2010, 08:15 PM
This is a good article. It is reiterating that the IMF is still seeking global fiscal balance inclusively and that their goals have not shifted. The portion of the article in which it says,


"While financial markets have improved somewhat in recent weeks, ongoing financial market strains have heightened uncertainty," he noted. "Against this backdrop, the overarching policy challenge is to sustain the recovery while restoring confidence."Is primarily speaking of the Euro crisis. I've been watching the stress test for the E.U. banking sector. The news is now saying that stronger banking regulations are now needed. (Shocking, eh? Yeah, not so much) Some banks will be closing while others will be getting bailed out.

The portion of the article that says,


an ambitious and vigorous program" to repair and reform the financial system.Is merely alluding to the banking safeguard that the IMF is wishing to see passed. They are seeking all institutions to contribute a form of "global banking tax" to create a fund to be held by the IMF, in the case of another banking failure as we see now. Of course, the Swiss are wildly in disagreement with this idea. lol

The portion of the article that says,


countries facing sovereign funding pressures still will require upfront measures to underpin confidence.Is not pertaining to Iraq. When they say "sovereign funding pressures," it is talking about countries experiencing budget issues within their countries. Such as Greece and Spain for example...