‘World economy making modest recovery’

John Lipsky, the second-ranking official at the International Monetary Fund (IMF), said Group of 20 nations deputies showed confidence about the global economic recovery, even taking into account challenges and risks.

“They’re mainly confident that there’s a moderate recovery under way globally,” Lipsky said after a G-20 deputies’ meeting in the South Korean city of Gwangju. There are “obviously risks and challenges but things seem to be moving more or less in the line with our forecasts.”

His comment came a day after Bank of Korea Deputy Governor Kim Jae Chun said the deputies discussed concerns that the recent volatility in financial markets may dim the immediate outlook for the global economy.

Global stocks rallied this week after three weeks of declines in the MSCI World Index on concern that the recovery from the worst recession in many decades may falter. The Federal Reserve may consider a second round of large-scale purchases of securities to stop the US falling back into recession, and the Bank of Japan expanded a bank-loan program to buttress domestic demand last month.

Lipsky also said the agenda for changes in the IMF’s board representation and quota system has made “good progress.” He declined to comment on European Central Bank President Jean-Claude Trichet’s call for unity to protect seats.

Trichet had urged European Union (EU) countries to find a unified position over threats to the bloc’s influence at the IMF.

The US is pushing to give emerging economies more say on the fund’s 24-seat board of directors.

The US rejection of a proposal last month to maintain the IMF’s executive board in its current form may force a reduction in the nine seats held by EU countries including Belgium and the Netherlands. (Bloomberg News)