IMF warns of 'double-dip' recession

IMF's Managing Director Dominique Strauss-Kahn

A fragile recovery remains on the cards for the global economy, at least according to the International Monetary Fund (IMF), who have warned that we could experience a second downturn this year - a so-called double dip recession.

The warning comes from the IMF's Managing Director Dominique Strauss-Kahn, who has said that countries should not exit from stimulus packages just yet, reports the BBC. "We have to be cautious because this recovery remains fragile." He did, however, note that China and Asian economies are leading the way in terms of recovery.

Bolstered growth

According to Strauss-Kahn, in most countries, economies are still supported by governmental policies designed to bolster growth through huge amounts of government spending; and he has warned that, "for as long as [nations] don't have private demand strong enough to offset the need of public policy, they shouldn't exit."

The concern is that if nation's governments exit too early from stimulus packages, they risk going back into recession, and this is the warning Strauss-Kahn gave at a recent press conference in Tokyo. "If a country does exit too early and if we have a new downturn in growth, then, really, I don't know what we can do to counter such a slump."

However, the organisation's Managing Director added that tackling high levels of government debt will be a priority for many governments over the coming year, suggesting that the IMF is likely to raise its growth forecasts for the coming 12 months.

Currently the IMF is predicting the global economy will grow by 3.1 percent in 2010. "Recovery in advanced economies has been sluggish," Strauss-Kahn added. "The best indicator of what we can anticipate is private demand and employment, and the IMF will review these factors when making future predictions."

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