IMF Chief says global imbalances returning

IMF Chief says global imbalances returningHead of the International Monetary Fund warned that the improving world economy is beset by problems like high unemployment and rising prices that could fuel crippling trade protectionism or even lead to war within nations.

Rising food and fuel prices in recent months have already hit poorer countries and are one of the biggest factors behind massive anti-government protests in Egypt and Tunisia.

From in.finance.yahoo.com:

“Growth in economies with large external deficits, like the U.S., is still being driven by domestic demand. And growth in economies with large external surpluses, like China and Germany, is still being powered by exports,” he said.

“As tensions between countries increase, we could see rising protectionism — of trade and of finance. And as tensions within countries increase, we could see rising social and political instability within nations — even war.”

Over the next decade, 400 million young people would join the global labour force, posing a daunting challenge for governments, he added.

“We face the prospect of a ‘lost generation’ of young people, destined to suffer their whole lives from worse unemployment and social conditions. Creating jobs must be a top priority not only in the advanced economies, but also in many poorer countries.”

Dominique Strauss-Kahn said in a speech in Singapore, “The pre-crisis pattern of global imbalances is re-emerging.”

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