December 16, 2008
The head of the International Monetary Fund urged governments to step up action to stem the global economic crisis or risk delaying a recovery and sparking violent unrest on the streets.
Using a speech last night in Madrid to issue his stark warning, Dominique Strauss-Kahn argued that government efforts to tackle the economic downturn so far have been uncertain and largely insufficient, which could lead to severe consequences. He singled out the eurozone nations as he attacked the inadequate global response.
His hard-hitting coments came as fears of a prolonged slumped intensified after China showed signs that its economy could be in more trouble than initially expected next year. Factory output in the rapidly growing economy registered the weakest growth in almost a decade last month.
The IMF’s managing director said such news signalled that a world recovery may not take place until late next year or into 2010 unless swift action is taken.
“A lot remains to be done, and if this work is not done it will be difficult to avoid a long-lasting crisis that everyone wants to avoid,” he said.
Governments in leading economies have been called upon by the IMF to commit a combined 2% of global GDP, equivalent to £1.075bn, to try combat the dangers of a global recession. But the IMF chief blamed governments, saying they were unwilling or unable to use more public funds to jump-start economic activity.
“If we are not able to do that, then social unrest may happen in many countries – including advanced economies,” Strauss-Kahn said.