WASHINGTON: The global economy faces an uneven recovery, with sluggish growth in Europe and an uncertain outlook for the United States, the head of the International Monetary Fund said on Thursday.
“The bad news … is coming from Europe where the recovery is really sluggish and where growth is the main problem to face. Then, there is the United States,” IMF Managing Director Dominique Strauss-Kahn said at a Thomson Reuters Newsmaker event. “What’s happening in the United States is very uncertain.”
The IMF is deeply involved with the European Union in efforts to stabilize the debt-stricken economies in Greece and Ireland and ward off a rolling crisis of investor confidence that threatens to embroil other European economies and bond markets.
Strauss-Kahn expressed confidence that efforts to get Ireland’s economy on a sounder footing through a rescue package will be successful. “It’s going to work but of course it’s difficult,” he said.
Ireland’s parliament on Wednesday approved an 85-billion euro joint European Union-IMF bailout. The IMF is expected to announce a decision later on Thursday about releasing funds to the Irish government, which is trying to prop up a stricken bank sector.
Strauss-Kahn has pushed European leaders to expand their policy efforts to cope with the euro zone’s debt crisis, notably in a speech earlier this month when he warned that all the effects of the global financial crisis were still in play.
“The situation in Europe remains troubling and the future is more uncertain than ever,” Strauss-Kahn said, urging a more coordinated response and speed in strengthening supervision and creating effective crisis resolution mechanisms.
He repeated on Thursday that Europeans need to step up with a coordinated response to the debt crisis they face and said the resources to do so were available if they have the will.
The IMF chief also expressed confidence that the euro currency would surive the crisis.
“It’s a strong currency which behaved during the last ten years better than even the Deutsche Mark in the previous decade,” he said. “I see many reasons why there may be a problem in the euro zone in terms of growth, unemployment, even, beyond unemployment, social problems … but that doesn’t mean at all that I see any threat to the euro.”
“Any solution other than the euro would be worse for the euro zone members.”