The head of the International Monetary Fund chief warned Monday that social unrest may erupt in many places unless nations take stronger action to boost the global economy. Dominique Strauss-Kahn urged countries to expand their proposed stimulus packages to bolster faltering economies.
At a conference in Spain, he said the world may face a global recession which could drag on longer than necessary without strong action. The IMF managing director said even China's roaring economy will not escape the global slowdown. He said the IMF might cut its forecast for the country's economic growth next year from more than eight percent to around five percent. He also said the European Union's stimulus package is insufficient. The package is worth one-and-a-half percent of Europe's gross domestic product.The IMF recommends a combined stimulus effort equivalent to two percent of the world's gross domestic product.
Meanwhile, World Bank President Robert Zoellick said in Beijing Monday that the best way for China to help support the world economy is by strengthening its own economy. He acknowledged the downturn in international trade would make that difficult. But he said China's 600 billion-dollar stimulus package and other efforts to boost domestic consumption would help wean the country off its dependency on exports.