Global economic crisis may take 10 years, says IMF chief economist

BUDAPEST – The world economic crisis could take 10 years to run its course, the IMF’s chief economist Olivier Blanchard told Hungarian business news site Portfolio.hu in an interview published on Wednesday.

“It’s not yet a lost decade,” Blanchard said, “but it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape.”

Urging greater solidarity between member countries of the eurozone and more integration in fiscal and economic policy, he said Europe “has to go forward” with integration to make the common currency zone a success.

“It cannot stay where it is. I think nobody really wants to go back,” he said.

“When a country is doing poorly the others have to be willing to help in various ways, not only out of solidarity, but because trouble in one country may well spill over to theirs.

“This is why the fiscal union and the banking union proposals being worked on as we speak are so important,” he explained.

Blanchard also said the United States has a fiscal problem which it hasn’t dealt with yet.

“Most analysts are confident that when it needs to be done it will be done. I hope they are right,” he said.

Elsewhere, Blanchard said Japan faced a difficult fiscal adjustment and could take decades to solve its debt problems, but that the IMF did not forecast any hard landing for China.

“China has probably taken care of its asset boom although it has slower growth than before,” he said. — Agence France Presse