Unemployment to Rise for 10-11 More Months: IMF Chief
The economy is growing but the crisis is not over, as unemployment is likely to continue rising for the next 10 to 11 months in developed countries and in some of the developing ones, Dominique Strauss-Kahn, managing director of the IMF, told CNBC Thursday.
"I think that recovery is coming back, even so the crisis is not over," Strauss-Kahn told "Worldwide Exchange."
"You have to keep in mind that there is always a long delay between growth resuming on one hand and a peak in unemployment on the other hand," he added. "It's difficult to say that the crisis is over when you have unemployment rising."
The crisis has provided a good opportunity for a rebalancing of the world economy, which must not be wasted, according to Strauss-Kahn.
"It's a big rebalancing of the global economy that we may contemplate in the coming years and we have to do this in a coordinated way," he said.
"The role of China, and not only in terms of growth but also in terms of correcting the imbalances in the global economy, will be a major role in the coming years."
One of the big changes the crisis has brought is the fact that Americans have increased their savings rate but "the bad news is that then we have to find some other engine for growth," Strauss-Kahn said.
Turning to emerging economies for a shift to a domestic-led growth model will help to compensate for the slower increase in consumption in the US, and this has already begun to happen, he said, noting China's measures to stimulate its own economy during the meltdown.
China is probably closer than other countries to exit the various stimulus measures it put in place, while others will get out of their stimulus policies at different times.
Meanwhile, the dollar has resisted the crisis very well as most people in the world still believed it was the safest way to keep their money, so in the immediate future the greenback's role will not decrease, Strauss-Kahn predicted.
"What I'm surprised is that the dollar has been very resilient during this crisis; most of economists could have expected, because the crisis originated in the US housing market, that the dollar would finally collapse. It didn't happen," he said.