International Monetary Fund chief Dominique Strauss-Kahn said Monday in Tokyo that Japan and other leading economies should avoid easing their stimulus programs “too early” before private demand becomes strong enough.
“If countries exit too early (from stimulus), and if we have a new downturn in growth, then really I don’t know what we can do,” the IMF managing director said at the Foreign Correspondents’ Club of Japan.
Although the IMF does not forecast a double-dip recession, he said, “You never know. It may happen.”
Strauss-Kahn said stimulus measures that have been implemented by many countries since the global economic crisis erupted should be kept in place until there is a solid recovery in private demand and an improvement in the labor market.
He warned that if the economy moves back into a serious recession, there may be no way out as “a lot of our tool kit, in terms of fiscal and monetary policy, has been used” already.
On the economy, Strauss-Kahn said, there is still a need to “avoid a new downturn” and therefore he “understands” why it is important for the new government led by the Democratic Party of Japan to put more money into steps aimed at boosting personal consumption.
Strauss-Kahn, however, did not forget to mention there was also a risk of exiting “too late” from unconventional economic measures.
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