'World has started to crawl out of recession'

International Monetary Fund (IMF) chief Dominique Strauss-Kahn yesterday said the world economy is showing signs of stabilisation but appealed for caution in assessing the state of the economy.

He said the worst of the global economic crisis is not yet over but there are signs that the world has started to crawl out of recession.

Finance ministers of the Group of Eight nations agreed over the weekend that the global economy was showing encouraging signs of stabilisation and started to consider how to unwind rescue steps for their economies.

The IMF managing director, on a visit to Kazakhstan, said he largely agreed with their position but he appealed for caution in assessing the state of the global economy. "Their stance is that we are beginning to see some green shoots but nevertheless we have to be cautious. The large part of the worst is not yet behind us," he said in opening remarks at talks with Kazakh Prime Minister Karim Masimov.

"We see, at the IMF, a recovery towards the beginning of 2010. 2009 is already done, we know it's a bad year," he said.

"At the global economic level, the growth will be -1.3 (per cent), which is the first negative growth since the Depression. 2010 may be better and we expect recovery in the first half of 2010."

Pressure has been building in the G8 for plans to wind down economic stimulus as soon as it is no longer needed – "exit strategies" that would prevent market interest rates from climbing high enough to threaten economic recovery.

Strauss-Kahn referred to credit growth as a sign that financial activity was beginning to pick up, but did not say whether the IMF was ready to help with a possible "exit strategy" once economic recovery is certain.

He said an expected worldwide economic revival in the first half of next year would help emerging market countries such as Kazakhstan to return to healthy gross domestic product growth.

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