Policymakers see growth reviving, still fragile

Sat Jan 30, 2010 6:43pm EST
 
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By Natsuko Waki and Krista Hughes

DAVOS, Switzerland (Reuters) - World economic growth may be springing back faster than expected but recovery remains fragile and a better balance is needed between exporting and importing nations, top policymakers said on Saturday.

An acceleration in U.S. GDP has fanned optimism about the outlook for global growth but top White House economic advisor Larry Summers told delegates at the World Economic Forum a heavy price of unemployment would be paid for some time to come.

"What we are seeing in the U.S. is a statistical recovery and a human recession," he said at a panel discussion.

"My judgment is ... that GDP growth will continue at a moderate rate at least for the next several quarters ... What is disturbing is the level of unemployment. This is not just a cyclical phenomenon but also a structural phenomenon."

The U.S. economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest in more than six years. But the jobless rate is at 10 percent.

International Monetary Fund chief Dominique Strauss-Kahn said Asia was leading the world out of recession.

"Growth is coming back and faster than expected, but is still fragile ... Private demand is still rather weak," he told the same panel. "The Asian part of the world is now close to total recovery."

REBALANCING   Continued...

 
<p>Glenn Stevens, governor of the Reserve Bank of Australia (RBA), gives a speech at the Australian Business Economists dinner in central Sydney December 8, 2009. REUTERS/Daniel Munoz</p>