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By Tamora Vidaillet
PARIS, June 22 (Reuters) - Most countries around the world have steered clear of catastrophic outcomes arising from the financial crisis but must carefully time moves to shift away from fiscal stimulus, the IMF's chief economist said on Monday.
Olivier Blanchard also told an investment forum that "fairly substantial adjustments" might be needed in the value of the dollar in order to achieve the big export boost needed for a sustainable recovery in the U.S. economy.
Advanced nations were likely to see positive growth or an economic reading of close to zero by the end of this year, prompting the need for policymakers to reconsider how best to foster recovery, Blanchard said. "The crisis is not quite over. It is safe to say that we have avoided the most catastrophic outcomes which didn't look impossible in the fall," he said.
While fiscal stimulus was still a crucial tool to cope with the economic downturn, and probably would remain so for the coming year or two, governments had to think hard about timing their exit strategies, he said.
"We basically have to move away from this -- and there, there is a really delicate balancing act which is that timing is of the essence," he said, referring to fiscal stimulus.
Rolling back on the fiscal push too early, as some governments were tempted to do, could result in an unwelcome decrease in public demand, he said.
Waiting too long could spur uncertainties in financial markets over perceived risks, he said.
To ensure sustainable recovery, the United States needed to put more of an emphasis on external rather than internal demand, he said.
But such a strategy could be hard to achieve without changes in exchange rate levels.
"For the U.S., it is absolutely no question that a sustained recovery has to come from a large increase in exports. That may not be very easy to do," he said.
"This may require fairly substantial adjustments in the dollar," he added.
The Washington-based IMF was currently in the process of revising its economic forecasts, he said, adding that the pace of recovery was likely to prove relatively weak.
"We are going to get steady improvement in net exports in the U.S., some limited adjustment in Asia, some retrenchment of public spending but not enough at this stage to basically ensure a very strong recovery and clearly there are risks on the downside," he said.
New forecasts could be expected in early July, he said, declining to give details.
"I cannot give a preview of the (new) numbers, but there aren't going to be dramatic differences. There will be some differences, but not dramatic ones," he said on the sidelines of the forum.
"They could be up or down by one percent," he said. (Additional reporting by Anna Willard; editing by Stephen Nisbet)