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UPDATE 1-World to emerge from crisis in early 2010-IMF chief

Published 05/29/2009, 09:30 AM
Updated 05/29/2009, 09:34 AM

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MARRAKECH, Morocco, May 29 (Reuters) - The global economy is likely to emerge from crisis early next year but even after that financial systems will need to be monitored closely, the head of the International Monetary Fund said on Friday.

"We expect to get out of the crisis early in 2010, especially if a clean-up of certain segments of the financial system is carried out," IMF Managing Director Dominique Strauss-Kahn told a conference in Morocco.

"We should not forget the task of continuing to monitor the global system once we emerge from the crisis," he said.

Improving economic news has been emerging across the globe lately -- from U.S. GDP to Japanese factory output and British house prices to German retail sales -- raising hopes that the world economy was responding after months in intensive care.

U.S. data on Friday showed the giant economy did less badly than government had feared in the first quarter, shrinking 5.7 percent instead of the initial forecast of 6.1 percent.

In his speech, Strauss-Kahn said there were lessons that the international financial community should draw from the crisis.

"We draw two conclusions," he said. "We have an awareness of the global climate but we do not have a ready answer for that global reality."

He also said that, after the Asian financial crisis in the late 1990s, global economy-watchers had been mistakenly expecting emerging markets to be the source of the next crisis and so were caught off guard when problems emerged elsewhere.

"We have left aside the developed economy," said Strauss-Kahn. (Reporting by Lamine Ghanmi; Writing by Christian Lowe; Editing by Richard Hubbard)

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