The global recovery, and all the good data we’ve seen, depends heavily on government stimulus.
Says the IMF’s managing director Dominique Strauss-Kahn:
“Growth is resuming almost everywhere, but these growth figures are more related to public support rather than private demand,” he said at an event in the Jordanian capital today. “Until private demand will be strong enough and sustainable to provide growth it will be difficult to say that the crisis is over.”
“We’re not out of the woods because the recovery is a recovery which is clear, which comes earlier than expected, but which is also a threat” because it may encourage some governments to withdraw their stimulus packages, Strauss-Kahn said when asked whether the IMF will raise its forecast.
He’s warning governments around the world not to get too giddy about recent positive economic data. There’s a risk that they remove life support before the patient is ready.
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