Wednesday, 2 February 2011

Imbalanced growth threat to global economy says IMF chief, Mr Strauss Kahn

"most of the problems affecting countries in north Africa are related to youth unemployment"

This is something from Channel News Asia that I must share:

Imbalanced growth threat to global economy: IMF chief
By Sabrina Chua | Posted: 01 February 2011 1735 hrs

SINGAPORE: International Monetary Fund (IMF) chief Dominique Strauss-Kahn said the global economy is on the road to recovery, but warned it could be derailed by imbalanced growth between advanced and emerging economies.

In Singapore to give a public lecture, Mr Strauss-Kahn also talked about the impact of the turmoil in Egypt, saying it was unlikely to make a long-term impact on the global economy.

"think the reaction at the global level was more emotional. Egypt is not an oil exporter country so I don't think it will have a lot of influence on the oil markets even though in the short term it is a bit shaken," Mr Strauss-Kahn said.

"I don't think it will have a lot of influence. But what is true is that fixing this problem is very urgent because we have to avoid this kind of situation (which) may spill over to other countries in the region".

Mr Strauss-Kahn added that most of the problems affecting countries in north Africa are related to youth unemployment.

He said a few months ago, he delivered a speech in Morocco about "the time bomb that youth unemployment may become in those countries".

"And I am very sorry to see that it didn't last very long before some kind of unrest takes place both in Tunisia and in Egypt."

Mr Strauss-Kahn also talked about the trend of a two-speed global economic recovery, with weak growth in advanced economies and emerging markets facing the prospects of overheating.

He said the IMF was especially concerned about the two-speed recovery, as it sows the seeds for the next crisis.

"It's a problem because it creates huge imbalances and those imbalances are certainly one of the things we need to be afraid of in the future.

"So the role of international organisations like the IMF and multilateral bodies like the G20 is to try to have everybody working to make this recovery more even," Mr Strauss-Kahn said.

When asked about his take on China's currency, Mr Strauss-Kahn said the appreciation of the yuan would take time, due to the size of the Chinese economy.

Advanced economies have repeatedly called on China to revalue its currency.

But Nobel prize winning economist Robert Mundell has warned that a sharp appreciation of the yuan would be a mistake. Instead, he said it should be allowed to gradually rise by two to three per cent a year.

"It is obvious that the (yuan) is not going to appreciate overnight. It will take time because the Chinese economy is a huge economy, with a long list of problems to solve," Mr Strauss-Kahn said.

"We cannot focus on the (yuan) as if it were a kind of a silver bullet that revaluating the (yuan) will solve all the problems in the world. That's totally wrong.

"On the other (hand), it would be ridiculous to believe the value of the currency has no influence.

"The only question that remains is the speed of such a move. And there may be some dispute about that. We at the IMF believe that the direction of the move and the commitment is more important than the speed.

"And I think that in the coming 12 months, things will move rather significantly".

Read the full article here.

Governments beware, a unemployed man is hungry, a hungry man is an angry man! Ben ali and Mubarak realised that after it is too late for them.

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