(China Daily)
Updated: 2008-05-15 07:42

The International Monetary Fund (IMF) does not expect the global economy to recover before 2009 even though a "large part" of the financial crisis may be over, its chief Dominique Strauss-Kahn said yesterday.

"It's too early to know if the financial crisis is really behind us," Strauss-Kahn told a conference in Jerusalem to mark 60 years since the founding of Israel in 1948. "Probably a large part of the financial crisis is behind us, but it is difficult to know if everything is behind us," he said during a session on the global economy. "How long will the slowdown last? I don't see a recovery before 2009," he said.

Strauss-Kahn noted that robust emerging markets, such as China, India and Brazil, were underpinning the global economy, despite a crisis that started in the US subprime mortgage sector - a problem he said persisted.

Rising oil, commodity and food prices also remained a drag on the global economy, he said.

European equity markets firmed and the dollar rose broadly yesterday as worries about US economic growth eased on the back of better-than-expected US retail sales data and attention turned to inflationary pressures.

But Goldman Sachs senior global strategist Abby Joseph Cohen, also speaking at the conference, echoed Strauss-Kahn's caution, saying "the pain is not over" for the US economy.

However, Joseph Cohen said she expected the world's biggest economy to stabilize in the second half and to register growth in 2009.

"Over the next few months economic data in the United States will show signs of stability, and we think that in 2009 we will have a year of economic growth," she said.

"It won't be 4 percent, but there will be a plus sign in front of it."

Joseph Cohen said predicting the impact on financial markets was a tougher task. She said there were signs market volatility had eased, the global appetite for risk was starting to recover and US equity and corporate bond markets were behaving "more normally".

"We do believe things are in the process of improving..." she said.

"Some lenders have come back into market, some equity investors are coming back into the market, and some banks are starting to lend."