The global economy could still worsen and consumer demand is unlikely to recover as strongly as it has in the past, a senior IMF official said yesterday.
The IMF is concerned about “downside risks” to the economy, deputy managing director John Lipsky said.
“This is absolutely not the time for complacency,” he told reporters.
Japan’s recovery prospects hinge on the health of foreign markets given the country’s heavy dependence on exports, he said.
Emerging countries would be at the vanguard of a recovery from the current “Great Recession,” followed by advanced economies, which should return to growth next year, Lipsky said.
While that would be good news for Japan, the fallout from the credit crunch means that people may not be rushing back to the shops as quickly as they did during previous recoveries, he said.
“Consumer demand in some of the advanced economies such as the US may not recover as strongly as it did in the past,” Lipsky said.
The IMF last month said the global economy would shrink 1.3 percent this year, but grow 1.9 percent next year.
On Monday, World Bank president Robert Zoellick said the global downturn was abating and growth could resume this year or next, while European Central Bank (ECB) Vice President Lucas Papademos sounded more upbeat about Europe’s prospects.
Only a week ago, Zoellick highlighted the high degree of uncertainty about the world economy’s future, while Papademos’ take on the euro zone was more optimistic than the ECB’s base scenario of recovery only taking hold next year.
“Our central scenario continues to be that the recovery of the European economy and of the euro zone in particular, will gradually take place during next year,” Papademos told Athens News Agency in an interview. “But recent evidence may be suggesting it could come a little sooner ... meaning towards the end of 2009.”
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