Politicians and bankers appear to have called a ceasefire following a week of mutual sniping at the World Economic Forum, amid claims they have agreed on the need for global financial regulation.
Another thorny problem is when to remove the massive stimulus packages from the economy. If the plug is pulled too early the world faces a fresh downturn.
The IMF chief, Dominique Strauss-Kahn, urges caution: “The question is not about three months earlier or three months later, we will have to deal with this for five, six, seven years, depending on the country. So really the difference between exiting too early or too late is very strong and our recommendation is not to exit too early.”
Josef Ackermann from Deutsche Bank believes that both governments and banks are entering uncharted waters. He said: “The banking sector is clearly benefiting from the tremendous initiatives being taken by governments and by central banks. But there’s also a risk of the timing and the impact of the exit strategies which is unknown to all of us because we’ve never gone through that.”
The OECD predicts global growth for 2010 will be around 3.4 per cent from the 2.3 per cent it forecast in June, after an estimated contraction of 1.7 per cent last year