Strauss-Kahn cautious on recovery prospects

The world economy has a long way to go before it mounts a sustained recovery.

IMF head Dominique Strauss-Kahn delivered this gloomy message in a speech in Austria late last week - saying that ’further tests’ are ahead due to the credit crunch.

However, Mr Strauss-Kahn also praised the policy response to the financial crisis from governments and central banks around the world - who have cut interest rates across the board and launched ambitious fiscal stimulus packages in some cases.

IMF forecasts suggest that global growth will go negative across 2009.

The UK is predicted to do still worse, suffering an annual contraction of over four per cent.

Mr Strauss-Kahn commented: ’This crisis is not yet over and there will, in all likelihood, be further tests ahead.

He added: ’The big challenges lie ahead. Let’s not lose the momentum.’

Most recent GDP figures from the UK government show that output fell by 1.9 per cent over the first quarter of the year.

Britain officially entered recession at the end of 2008.ADNFCR-2318-ID-19174183-ADNFCR