The financial crisis could even lead to a war…
…Says the head of the International Monetary Fund, adding that the only solution lies in cleaning up the financial sector.
March 24, 2009 10:09 by Aarti Nagraj
The current economic crisis will push millions into poverty and unemployment, and may cause social unrest and even war, the International Monetary Fund (IMF) managing director Dominique Strauss-Kahn has warned, reports Reuters.
“Bluntly the situation is dire,” he told a meeting at the International Labour Organisation (ILO). “All this will affect dramatically unemployment and beyond unemployment for many countries it will be at the roots of social unrest, some threat to democracy, and may be for some cases it can also end in war,” he said.
Strauss-Kahn also said that the IMF will update its economic forecasts to show that the world economy is contracting by between 0.5 and 1 percent this year, the first reversal in more than 50 years. Economies in developed countries would shrink by about 3 percent, he said.
The global financial crisis is already in its seventh month (going by the collapse of Lehmann Brothers in September), with its roots in August 2007 in the US, and already millions of people around the world have lost their jobs. ILO predicted earlier this year that 50 million will be cut by the end of 2009.
But the idea that it could actually lead to a war…
However, Strauss-Kahn also said that recovery was still possible in 2010, if the right policies were followed. According to him, the main prerequisite is the restoration of a healthy financial sector.
“You can put in as much stimulus as you want. It will just melt in the sun as snow if at the same time you are not able to have a generally smaller financial sector than before but a healthy financial sector at work,” he said.
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