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UPDATE 1-IMF boss says global recovery may start late 2009

Published 10/23/2009, 10:23 AM
Updated 10/23/2009, 10:27 AM

* Strauss-Kahn sees beginning of the end of the crisis * Says dangerous if stimulus measures withdrawn quickly

* Would favour adding 2-3 members to G20

* Not concerned about Brazil capital inflows tax

(Combines separates, adds quotes, details)

By Richard Solem

OSLO, Oct 23 (Reuters) - International Monetary Fund managing director Dominique Strauss-Kahn said a global economic recovery could start this year rather than in the first half of 2010, when the body's present forecasts predict.

"It could begin earlier than in the first half of 2010, in late 2009," Strauss-Kahn said in a speech in the Norwegian capital. He said latest IMF projections show global growth at 3 percent next year after a decline of 1 percent in 2009.

"Just now we see the beginning of the end of the crisis."

But he repeated that governments should not withdraw fiscal stimulus measures too quickly, which could lead to a "W-shaped, double dip recession".

Strauss-Kahn said that normally unemployment continued to rise for about a year after recovery starts, during which time countries should refrain from slashing extraordinarily lax policies in what is referred to as an "exit" strategy.

"We cannot say we're out of the woods until we know the peak of unemployment... We have to walk, not run, to the 'exit'," Strauss-Kahn said.

He said the IMF will lend four times more this year than last as it helps countries deal with the global crisis.

Strauss-Kahn also said the Group of 20 of the world's biggest economies, which has taken the lead in coordinating policy to revive the global economy, would have a broader reach if it included a few new members.

"We could add two or three countries," Strauss-Kahn told reporters after a speech in the Norwegian capital on Friday.

He did not name any countries that he believes should be added but said that, for example, Scandinavian countries did not have a seat at the G20, nor did African states.

Asked if he was concerned about other countries imposing a tax on capital inflows as Brazil has done, he said: "No, I'm not afraid and it's not that important. I am not sure if it's that effective or manageable." (Reporting by Richard Solem and Wojciech Moskwa; Editing by Andy Bruce)

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