World recovery sluggish, jobs worrisome: IMF chief


WASHINGTON — The head of the International Monetary Fund says that while the global economy is recovering at a sluggish pace, the recovery remains uncertain because of the risk that not enough jobs will be created to make the rebound secure. Dominique Strauss-Kahn said he was optimistic about the outlook for the United States, the world’s largest economy. A risk remains of a dip back into recession, he said, but it is not substantial. He told a group of reporters Tuesday ahead of next week’s annual meetings of the IMF and the World Bank that Asian and Latin American economies were doing well but prospects for some European countries remain uncertain. Still, he said, “There is no good to expect from intervention. History has shown that this kind of intervention does not last long.” Strauss-Kahn also said he expected a solution soon to a struggle within the 187-nation lending organization over voting shares and board seats. Speaking of the global economy, he said it would be difficult to say the crisis that began toward the end of 2007 is over until “unemployment is really decreased.” Strauss-Kahn said the risk of a jobless recovery “is still real. Even if the recovery is secure, the question is how many jobs this will provide.” He said the IMF does not see the risk of a double-dip recession in the United States “as big as some others do.” Strauss-Khan said China and other Asian countries were maintaining strong rates of growth as were many Latin American countries. He said China’s effort to rebalance its economy away from export-led growth and toward putting more emphasis on strengthening domestic consumption was a “step in the right direction.” On Europe, he said the recovery was not strong enough and that some countries, particularly Ireland, Spain and Portugal, “were not at the edge of a cliff but still have serious fiscal issues they have to address.” Strauss-Kahn, a former finance minister of France, also said European countries understood the need to redistribute power within the IMF and give a stronger voice to developing countries who are playing an increasingly important role in the global economy. These countries and some poorer developing nations have long resented the dominant role that the United States and European nations play within the IMF. The U.S. and European nations founded the IMF after World War II, and its structure and practices reflect their influence and that era. He said the IMF had provided various scenarios to its members on how to resolve the voting shares issue and a solution could come at the annual meeting or at a G-20 conference in South Korea this year. Strauss-Kahn said there were no guidelines in the fund’s charter for distribution of seats on the 24-member decision-making executive board, and it must be the job of member nations to resolve the issue. Some countries want the nine seats that Europe holds reduced to reflect the declining role of the region in the global economy, but smaller European nations are reluctant to give up their places. In contrast, Australia and South Korea share a seat and are content to continue that arrangement.