As the global recovery extends into 2011, developed countries will grow slowly while emerging-market economies will make quicker recoveries, the International Monetary Fund (IMF) chief economist predicted on Thursday. Olivier Blanchard said the necessity for countries to rebalance their economies by letting exchange rates adjust more freely while taking steps to control debt remains vital. “Without this global rebalancing, there will be no healthy recovery,” he said. However Blanchard said that “rebalancing is a complex process. No single measure, no one country holds the solution on its own,” adding that “exchange rate adjustment is an integral part of the process.” Blanchard said several European countries faced a difficult period of adjustment and added they likely would have found themselves in trouble even if the 2007 through 2009 financial crisis had been averted. Greece and Ireland are now receiving federal aid from the European Union and IMF, and they have to make structural adjustments to get debts under control. The IMF has been calling for countries like the Unite States that relied on consumer spending for past growth to save and invest more, and for export-reliant countries like China to encourage more consumption at home. China has increased surpluses on trade by selling goods cheaply in U.S. and European markets, drawing complaints that it deliberately keeps its yuan currency undervalued to gain an unfair advantage.
