Transcript of a Briefing of Asia Press by International Monetary Fund Managing Director Dominique Strauss-Kahn with Anoop Singh, Director of the IMF's Asia and Pacific Department, and Caroline Atkinson, Director of External Relations

February 3, 2009

With Anoop Singh, Director of the IMF's Asia and Pacific Department, and Caroline Atkinson, Director of External Relations
Washington, D.C.
Monday, February 2, 2009
Webcast of the Videoconference

MS. ATKINSON: Good evening or good morning to those of you who are joining from Asia.

This is an innovation to do a regional briefing just after we've had important updates on our [global] outlook, and this is the first one that we're doing it for Asia. I wanted to make that point before turning it over to Managing Director, Dominique Strauss-Kahn.

MR. STRAUSS-KAHN: Thank you, Caroline.

Good evening and, probably for those very far away, good morning.

I'm very happy to have this first meeting with the press with Asia. We always follow other parts of the world, but I think it's useful to try to get some information about what's going on, and, moreover, I'm going to travel to Asia at the end of this week. So it's a good occasion to do that.

I'm first going to give you a brief overview of the global economy, and also some stress on the regional figures, and then, of course, I will be happy to answer your questions.

On the global level, as you know, we experienced a major downturn with average growth at the global level which is close to zero. Our forecast is 0.5 percent. And it breaks down into very strong negative growth for advanced economies, minus 2 percent, compensated or balanced by some growth, not that big, but some growth in emerging economies which is around 3.3 percent. Those figures are the lowest rates we've experienced in the post-war period. So, really, the figures are rather gloomy.

Nevertheless, we expect some recovery at the beginning of 2010; for some countries, end of 2009. Of course, those forecasts are very uncertain, and it depends a lot upon the policy which may be implemented today and in the coming months.

As you know, we are pushing for two ideas. The first one is the idea of the necessity of a fiscal stimulus. Exactly one year ago, it was one year ago at Davos that I first said that we would probably need some fiscal stimulus. At that time, it appeared a bit odd that the IMF was arguing that some fiscal expansion was necessary, but obviously it was right, and it took some time to convince most governments that it was the right way, the right thing to do.

So now, in most countries where it was possible—where there was some room for debt sustainability and some room for fiscal expansion, those programs have been defined, launched or are in the process of being approved by the parliament, and this process is going on. But there's a second leg to this plan. The second leg has to do with restructuring the banking sector, cleaning up the balance sheets of the banks.

Our view is that both things have to be done in the same time and that if only the stimulus is launched without having this needed restructuring in the banking system, then most of the effect of the stimulus will be, let's say, not lost but not as important as effective as it can be.

We need to rebuild confidence in the financial sector. There's no way for developed economies and even for emerging economies today to have growth without a healthy financial sector, and the effort to be made to restore the soundness of the financial sector is something which is as important as the stimulus.

I clearly understand that politically it's much more difficult to explain to people that there's a need to put some money in the financial sector at the same time when most people believe—and they're right—that the crisis comes from misbehavior in the financial sector. But, nevertheless, it's true.

So both things have to be pushed, and I was very happy to listen this weekend to President Obama's declaration saying that his administration was considering the efforts to be made in the financial sector.

In Asia, while Asia was not the epicenter of the crisis, Asia has been hit hard. This comes from the linkages with the global economy. While that's the bad side of the coin, the good side of the coin was that, because of those linkages with the global economy, growth has been propelled spectacularly during the last decade in Asia. But, of course, the other side of the coin is that it makes Asian countries more vulnerable.

And more vulnerable, why? Mainly through channels—the very traditional one which is the trade channel, a slowdown in the advanced economies has resulted in less demand in those economies and less exports for emerging economies.

And another channel is newer, which is a channel through the financial linkages. Especially the fact is that most Asian economies, at least emerging economies or newly industrialized economies in Asia, have been relying a lot on important capital inflows during the last decade, and those inflows have dried up because of capital repatriation in advanced economies. The result of that is, of course, the need of funding for financing the capital, the current account deficit. Or sometimes, depending, the capital account deficit is more important than it has ever been in the past.

So through these two channels, trade and financial linkages, which go also through the stock market and things like this, obviously, even after some delay, Asian countries have been hit.

You remember that six months ago there was this funny story about decoupling with some arguing that once the economy wasn't going well in the advanced economies, you may have emerging economies doing not that badly because they could decouple. We always have been arguing here that there was not such a thing and that the question was only a question of delay, globalization was such that at the end of the day also emerging economies will be hit by the crisis we see today, that it is obviously true.

So the result of this is that the average growth for 2009 in Asia is, for us, at 2.7 percent with a 5.5 percent figure for developing Asia. But, again, it's very uncertain, and a worse outcome cannot be ruled out.

There are a lot of hypotheses that it can be better. There are some upside risks, but there's a lot of downside risk, and so it's our best forecast. But really, we have to carefully monitor what's going on in the coming months to be more accurate on what will be, finally, the outcome.

At the same time, there are some grounds for optimism in Asia. The first one is probably that Asia has very much improved fundamentals of the economy over the last decade. For this reason, there is considerable room for countercyclical response. Policymakers in most Asian countries, at least in all major countries, have already implemented substantial monetary and fiscal stimulus. At the same time, most of them, when needed, have launched adequate capitalization or recapitalization of the banking system.

The example of China is probably the most important one where very significant measures have been announced and are being implemented. And, at the same time, in our view, there is scope for additional steps and there is some room for doing more.

But what is very interesting in the case of China is that it's not only stimulus per se. It's also a big shift in the way the economy is working, shifting from an export-led growth to a more domestic-led growth which is exactly what the IMF was arguing for several months, maybe more.

So this process, which is obvious for China but is true for some other Asian countries too, is to reconsider the way of growth, the structure of the growth and the contribution to growth, and trying to have more contribution to growth coming from domestic demand and less from export is one of the results of the process which is underway.

If you add to that the legendary dynamism of Asian countries, I think that the rapid recovery—once the world economy will regain its footing, rapid recovery is possible. We expect that 2010, the average for 2010 for Asian countries will be over 5 percent which is almost doubling our forecast for 2009.

A few words at the end, as I said before, some countries are experiencing a very important problem in facing current account imbalances, and the Fund is prepared to help with considerable flexibility, to help very rapidly as we did it in Central Europe or when needed, we can disburse financing very rapidly.

And, of course, it may be necessary, and we all hope it will not be necessary, but it may happen that for some countries they will have some need because of the important outflows, or at least the stop of the inflows and sometimes the beginning of outflows that they may face.

As I told you at the beginning, I will be visiting Asia at the end of this week. I will respond to the invitation of Governor Zeti from the Bank Negara Malaysia, attending the South East Asian Central Banks (SEACEN) Governor's Conference in Kuala Lumpur—it's on February 6th and 7th—at the same time, celebrating the 50th Anniversary of the Bank Negara Malaysia. So I think it was a good opportunity to open this Asian week with saying a few words with you and answering your questions, if any.

Thank you.

MS. ATKINSON: Thank you very much.

We have some of you here in the room, and then also questions will be fed directly from Asia through the online Media Briefing Center for both Managing Director Dominique Strauss-Kahn and Mr. Anoop Singh, the Director of the Asia and Pacific Department.

QUESTIONER: Good evening. You forecast a recovery in 2010. Could you elaborate a bit more on what shape that recovery will take for Asia? What will be the drivers, for instance?

MR. STRAUSS-KAHN: Yes, let's do the drivers for Asia.

One is the global economy. We think that for several reasons we can expect a gain with some certainty and providing that the correct policies are implemented. But we can expect a recovery in the U.S. economy and, immediately after, in the European economy by the end of 2009, beginning of 2010. So, in this case, one of the drivers for the crisis in Asia, namely the low demand in advanced economies, will just disappear.

The other thing is that, as I said before, in most Asian economies, at least in major countries, a rather big stimulus both on the monetary side and on the fiscal side, depending upon the country, has been implemented. The result of this will happen in the coming months. So it's reasonable to believe that if it's correctly implemented and at the same time the banking sector problems are solved. But in Asia there are not so many banking problems to restructure—more in the U.S., much more in Europe.

So if all these things are done correctly, the reasonable delay for having the result of this, the figure is something like one year, so we come to the beginning of 2010.

QUESTIONER: I have a question about China.

The U.S. Treasury Secretary Geithner said that China is manipulating its currency, and I also note that you also repeated that the renminbi is significantly undervalued. But China insists that the criticism is misplaced and unfair. Could you comment on this dispute?

MR. STRAUSS-KAHN: The IMF has been arguing for a very long time that the renminbi is undervalued. And, myself, I remember last June in a conference in South America I made a long statement about this question. Several other officials from the IMF have been explaining this analysis.

There are many ways to look at this. The most easy is probably to look at the huge amount of surpluses from the current account balance in China, and I think that there's no dispute about that. I mean the Chinese authorities agreed that the renminbi should revaluate. The problem is how fast, how much. But the idea that certainly the renminbi today is undervalued, is, I think, common knowledge.

The point is that this question about the currency may not be, today, the most important one. In the situation of the world economy today, we need growth. We need to restore confidence. We need growth everywhere, in the United States. We need growth in Europe. We need growth in Japan. We need growth in China.

And so, I do consider today that there is a problem with this question of the currency, but it would be the main problem if it were in a quiet period and we're not in quiet times. So we better concentrate today on recovery, keeping in mind that it's true to say that the renminbi today is still undervalued.

QUESTIONER: Mr. Lipsky said on the weekend that the IMF plans to double its resources by increasing $250 billion in resources, and Japan has contributed $100 billion. So do you still expect China to contribute the remaining part? That's the first one.

The second one is here now we see a lot of sentiment about global protectionism because the House of Representatives has passed a bill that's containing a Buy American clause and also the Senate may pass an even broader range of Buy American in all the spending programs in that, but the House is just limited to still one area. So what do you think of the prospect of global trade?

MR. STRAUSS-KAHN: On the first point, I'm expecting everybody to contribute. As you just say, the Japanese already pledged for $100 billion, and I'm really thankful to the Japanese government to take the lead in this process. We're discussing with them to finalize the technical details of this agreement, but it's almost done, and I hope that other countries will follow.

Of course, all this depends upon the Board agreement here. It has to be discussed at the Board, but I'm very grateful that the Japanese prime minister takes the lead in this process.

Then other countries will have to follow. I think the Europeans already are committed to do something. They didn't give a figure, but we'll discuss with them, and we will see others. And, of course, if China is likely to be part of this process, China will be, of course, very much welcome.

Now on your second question, you're right. When you're in a crisis, you always have this threat that the idea of protectionism will be coming back, not only on the trade side but also on the financial side. And it relies on this idea, which is understandable, that you have a problem and you think you can find a domestic solution.

The problem is that we are in globalization, and even more than previously—probably it was already wrong in the past—but it's even more wrong today when you're in such a globalized economy, there is no way to find a domestic solution, to find a solution for yourself, your people, without taking care about the other ones. So the idea of protectionism is understandable, but really nobody can believe there's a solution in this direction. And we have to explain and explain again that a Beggar Thy Neighbor policy will never give a good result.

MS. ATKINSON: I'm going to take a question from the Briefing Center. "Since the economic downturn in Asia has been widely labeled as a cyclical recession, is it possible that some Asian economies could recover before the major economies in advanced countries and when do you expect to see a turnaround in the Asian economies?"

MR. STRAUSS-KAHN: Well, as I said before, we see the turnaround at the same time as the others, and it gives the answer to the first part of the question. We see it at the same time as the rest of the world because we don't believe that it's really possible for the Asian economies to have a recovery with the rest of the world economy being in such a bad shape. So, globally, the world economy will recover at the same time.

But it's true to say, and I underlined it a few minutes ago, that some Asian economies are really dynamic. They have a lot of resources. They have very strong fundamentals. And so, when the process of recovery will start, we may expect that for some economies it goes faster than for other ones. I think some Asian economies are very good candidates to be the leading economies when that process will start again.

So, in a nutshell, I don't think that there will be a player which can play alone. It goes back to the same answer that I gave about protectionism. It's a pool process in which everybody is involved. So Asian economies cannot recover alone without the rest of the world, but when the process will start some of them may recover very fast.

MS. ATKINSON: Another question from the Briefing Center."On East Asia, how do you expect that domestic demand there will indeed increase?"

MR. STRAUSS-KAHN: Well, you have several ways to increase domestic demand, but in broad terms you have two ways.

The first one is to increase public demand, and that's the need for infrastructure. Infrastructure is not only roads or railways. It's also health, education, even financial infrastructure like pension systems or things like this. And, obviously, in many Asian countries, especially emerging Asian countries of course, you have a big need for this. So to shift a significant amount of resources to this kind of demand is obviously increasing domestic demand.

The other way, of course, is to increase household demand—the demand for household consumption which also has to do, which is part of the result of increasing the public demand because the multiplier makes that, of course. If you invest money in building bridges or building schools, it has a lot of influence on the private consumption in the second wave. But you can also have other programs, helping the poor, for instance, the most vulnerable to cope with the crisis.

And we are in favor, when it's adequate and when it's possible, we are in favor of different kinds of cash transfer programs or things like this which may be directly of great help for the most vulnerable and has as a result to increase domestic consumption.

The problem to shift from an export model to a domestic growth model is not that much to know how to increase the domestic demand but to know how to increase the supply which is likely to alter this domestic demand because the supply is shaped for exports and the shape for exports is not the same shape or the same kind of production that you need for domestic demand.

So it cannot be done overnight. It's a big shift in the economy to be able to transfer a part of growth, which means a part of the output from export to domestic demand. That's a huge change which certainly is today in the interest of most Asian countries, especially China but not only China, and I think which is now underway.

MR. SINGH: Maybe I can add one quick point on that.

So, in the end, the challenge in Asia and most countries is to raise the share of households in national income. At the end of the day, that's what needs to happen. It can't happen very fast, but I think that is the target.

Over time, the share of households in national income needs to increase, and this involves policies in a number of areas—basically, changing the intensive structure so that it's not so much favoring capital-intensive and import-intensive manufacturing. I think there is a range of policies that need to be done, and I think many Asian countries realize that and are engaged in that.

MS. ATKINSON: A more specific question, "How much scope do you see for fiscal stimulus, infrastructure spending in particular? And maybe particularly the infrastructure spending in China, is there much scope?"

MR. STRAUSS-KAHN: Well, Anoop has probably more detailed information than I have. Of course, it depends upon the country. There is no one size fits all policy which can apply to everybody. In some countries, you have some fiscal room, and I said in my introductory remarks that in China we see some scope for even more fiscal stimulus. In some other countries, it's not the case. So it very much depends economy by economy.

MR. SINGH: Well, just briefly to reinforce that, and that is many countries do have some room at least, and certainly China has considerable room. I think I saw a headline in The Financial Times today or yesterday, saying that further fiscal stimulus is underway probably in China and that it will infrastructure-focused. So I think there is need and there is room in many countries.

And, as we have said on different occasions, not only is infrastructure important in Asia because it is needed—that is well recognized—but when it's part of a stimulus package for the current conditions, it's very useful because it takes time in some cases to come onstream. But that is good because we need that support to grown down the line throughout this year and into next year.

So infrastructure is both needed, and the timing of its implementation, if it comes a bit later, is not a problem. In fact, it's part of the equation.

MS. ATKINSON: Another rather specific question "What is your view on the impact on developing Asia—India and the Philippines and so on—of rising unemployment in migrants from those countries into the developed or the Gulf countries and would a slowdown or a reduction in work and remittances export the crisis to developing countries from the center?"

MR. STRAUSS-KAHN: Well, that's the main concern that we may have for the coming year. As far as unemployment is concerned, of course, we are talking about rather cold figures about growth, but behind this, you have a man and a women in work, a man and a woman losing their job.

And you probably have seen the figures released by the ILO considering only advanced economies and arguing that they're expecting 50 million unemployed people in the coming year. So this was covering only, well, advanced and close to advanced economies. It was not a comprehensive figure, but it shows that everywhere there's no reason why emerging Asia will avoid this as the consequences of this slow growth. Even if in some countries in Asia low growth means nevertheless positive growth, the result will be a sharp increase in unemployment.

There was a second point. Remittances have become a very important source of revenue for many countries. It goes from 3 percent for India to sometimes 8 to 10 percent in countries like Bangladesh. Of course, the slowdown in the economies where those people from different nationalities go to work may diminish the remittances.

On the other hand, there is sometimes a very countercyclical effect which is because of the decrease in the real income in the country of origin the workers abroad are sending more money than they used to send. So, finally, the remittances appear sometimes to work as a countercyclical process. Nevertheless, taken all around the expectation, of course, is a diminishing of these, a decrease of these remittances which will add to the problems of the current account balances.

MS. ATKINSON: There have been some questions sent by many people from China, and you all should feel free to ask questions as well.

But on this one, "the Chinese Premier has said that China will achieve the target of 8 percent growth this year. What do you think about this and what economic challenges do you think China will face? More generally, how do you see the economic and financial situation of emerging markets like China?"

MR. STRAUSS-KAHN: Growth of China is a very big challenge and is of tremendous importance for all the world economy. We are expecting 6.7 percent of growth. Eight percent would be very challenging, but it's possible. China has shown in the past that sometimes they may, well, the Chinese were able to do much more than expected. So 8 percent is probably not out of range even if our best expectation today is a bit below 7 percent.

It implies, as was just commented before by Anoop Singh and myself, it implies a lot of changes and difficult changes, painful changes in the Chinese economy, but those changes are obviously for the good and in the interest of the people of China.

It has to be done, and I have been discussing last year several times with the Chinese authorities, and they agreed that this move was a necessary move. So maybe if the crisis was not so deep, part of these changes would have been postponed or to be implemented later. Now, there's a real need to do it, and I think that it's going to happen in the Chinese economy this year.

So the result in our view will be, as I said, a bit lower than 7 percent, but it's possible that the rate of growth will be higher than that.

MS. ATKINSON: A more specific question about the Philippines: "What is the IMF's GDP forecast for the Philippines and will the global crisis affect the Philippines more this year than last?"

MR. STRAUSS-KAHN: I'm not sure I have the figures for the Philippines. Do you have it?

MR. SINGH: Well, yes, the Philippine economy has been slowing already as we know in 2008. Because it is very much caught up in the kind of global factors that are affecting demand across the region, we are projecting Philippine growth in 2009, on average, to be about 2.25 percent. So it will be less in 2008, but it will be positive, significantly positive.

And, to that extent, we are encouraged that the government continues to have some stimulus. There is some room on the fiscal side, not an awful lot, but there has been approval by Congress of the budget that has some appropriate stimulus.

All over Asia, we do see, including the Philippines, that inflation rates in some cases are falling faster than the rate at which interest rates are coming down. So we're not quite sure where the Philippines fits into the spectrum, but, as a general principle, inflation rates are falling very fast. Therefore, in many places, there remains considerable room for further monetary easing.

MS. ATKINSON: Another more general question about the IMF: "Will the IMF undertake some reform under the present economic situation? What and why and what is the IMF doing or what will the IMF do amid the current global crisis to combat that?"

MR. STRAUSS-KAHN: We're reforming every day. There are at least three different fields.

One is the experience we have from past crises including the Asian crisis and the way the IMF will try to help fix the problem in this crisis. Of course, the experience we have from the past crises, not only the Asian crisis but including the Asian crisis, the Latin American crisis and some other crises, is very useful to know better what may work, what may not work, what we should avoid, how we can work with countries. That's probably the reason why the programs we already have launched and mostly in Central Europe and also in Pakistan or in other parts of the world are somewhat different from the program from 10 year ago. That's one part of the reform.

The second part of the reform is that we are working very hard in rebuilding a new kind of early warning system. It's very difficult to have early warning concerning an economic crisis because each crisis is different from the previous one. And so, the system you build of course is built on the past, and so you're surprised by the new crisis.

Nevertheless, the crises in the coming decades are probably crises of the same kind as this one in one respect at least, which is to be global and also to be crises of the linkages between the real sector and the financial sector. This crisis is really the first one to be a crisis of those kinds of linkages and with adverse feedback loops which are more and more virulent between the financial sector and the real economy.

That's probably one of the reasons why the IMF's forecasts one year ago were more accurate than most of other institutions just because there are many institutions working on the real economy and there are also many institutions, including the central banks, working on the financial sector, but we are probably the unique institution working on both sides and on the linkages between these two. So one of the things we're doing and what we're working on very hard is to build this kind of new early warning system to be able at least to anticipate, at least partly, what may happen in the coming years.

And the third part of the reform has to do with the governance. This crisis is clearly a crisis of governance—governance of the financial sector, that's a question of regulation, but also governance of the world economy.

All the discussions which are taking place in the G-20 and the G-7 are the way to reform the economic governance—the place to give not only to 20 countries in the G-20, but we have 185 members in the IMF. All the 185 members want to have their word and may say their word on what's going to happen and the solutions they want to see implemented. All this reform of the governance will probably be very high on the agenda of the next G-20 on April the 2nd in London.

So, in all those fields—programs, forecasts, early warning, surveillance and, governance—the IMF is reforming a lot and, according to some, reforming too much. You always have conservatives everywhere, including in the IMF.

MS. ATKINSON: I'm going to take one more question from the online Briefing Center, and then there are a couple here.This is concerning low income countries. "What is the outlook for Cambodia and how will the current credit crunch and restrictions in advanced countries affect countries like Cambodia which rely on foreign finance and what should be done to address this challenge?"

MR. STRAUSS-KAHN: Well, that's a very important thing, that in this crisis we shouldn't focus only on big advanced economies and also big emerging economies but also on some low income countries where the situation can be even worse because they're facing not only the financial crisis, from which they're not immune, but also other kinds of crisis which took place last year.

I'm thinking about the food prices crisis. Even if food prices are now stable, they are stable at a higher level than the level we experienced one year ago. So this question of food prices is still a problem for many, many countries.

So, in the case of an economy like Vietnam, like Cambodia, like some other economies where a lot has to be done, the effort of the international community has to go on. And there is a risk, of course, for the reason we just covered before about protectionism, that the donors' countries being in crisis, their willingness to help and the amount which can be used for foreign aid will decrease.

There's no political campaign in any democratic country where this question is not one of the questions which is debated. This risk is a real risk we have to fight against, and we have to make it possible for development goals to go on even if we're in a global crisis.

So that's why I'm supporting very much what Bob Zoellick is trying to do. We're trying to build his trust fund for vulnerable countries so that it will be possible to go on helping them even if the global economy is in bad shape. It's not because the richest countries are in a mess that we should forget our commitment to low income countries.

Anoop, maybe you want to say more about Cambodia?

MR. SINGH: Yes. Well, clearly, we're very concerned for the reasons Mr. Strauss-Kahn has said about the situation in Cambodia. But so far, as Cambodia has been relatively sheltered from some of the adverse effects, growth has been holding up. We do think that although growth is going to come down in 2009, it could still be in the 4 percent range.  So it's still positive.

You have to remember in terms of policies Cambodia is highly dollarized economy. So there are limits to what they can do on the macroeconomic side, but we are supporting the fiscal stimulus that they have in their budget, and they have capital requirements as well. So there is some easing taking place.

I would say that in countries like Cambodia, other countries in Asia where there is an effect on the banking side, it's very important that country supervisors remain very vigilant to look at risks in the banking sector as well. This is not just Cambodia but in a number of countries because this is an import of a financial crisis from overseas.

MR. STRAUSS-KAHN: One thing that is very important and interesting in the Cambodian case is that, as Anoop said, they had rather high growth last year, but it was the first time for a very long period. So for political reasons, historical reasons, growth had been rather low, and then they had a very strong increase, something like 6 percent.

MR. SINGH: That's right.

MR. STRAUSS-KAHN: And then this increase and this recovery has just been destroyed by the crisis. We have the same process in some Western African countries where growth has appeared for the first time during the last two or three decades, strongly in the past three or four years, and there is a real risk that these efforts cannot go on because of the world crisis. So it's really important to be in the field and to try to help them.

QUESTIONER: I was told that you're expecting the growth of South Korea will be minus 4 percent this year but plus 4 percent next year, so steep growth of 8 percent in 2 years. So what is your main evidence to project those rates and do you have any policy recommendations for the South Korean government now?

MR. STRAUSS-KAHN: This figure of minus 4 percent for Korea has been a lot discussed during this week and we're in discussion with the Korean authorities to explain why we have this analysis. Maybe I will let Anoop, which is a specialist of this story now, to explain why we see that is the situation for Korea this year for, as you say, a rather strong recovery for 2010.

MR. SINGH: I wouldn't actually focus very much on that number, and I'll tell you why. The fact is that in the fourth quarter of 2008 the early indications are that GDP will decline by about 5.5 percent. So that already happened. When you feed this into an average projection for the year, it is heavily influenced by the last quarter of 2008.

More interesting, I would say, is to look at what we expect to happen from now onwards. Therefore, it's more interesting to look at the Q4 number for 2009. So we think that Q4 on Q4, that is 2009 and 2008 Q4, it should be positive. It should be positive plus 1.

And I think this is for a number of reasons. Firstly, it is consistent with our projection for the global economy. In our own projects, we do see that the Korean recovery in the second half of 2009 may even be slightly above that of its trading partners, and that is because there's a lot of stimulus on the way from the government's macroeconomic policies and the macroeconomic framework is very flexible. So from monetary easing to fiscal stimulus to preemptively looking at concerns on bank recapitalization, the government has been very active, and we do think this is going to help Korea in 2009.

So I would look more importantly at the number during 2009 because the minus 4 really captures what already happened.

QUESTIONER: Some are very skeptical about forecast figures especially for South Korea by the IMF, and they say the IMF is a bit short-sighted and just riding the wave. What would you say?

MR. STRAUSS-KAHN: It's possible. A forecast is a difficult exercise especially when you're talking about the future. But that's exactly the same remarks which have been made the French, the German and the Brits one year ago, and finally we were right.

So it doesn't mean that we will be right this time, but it means that when we take all the information we have and not only the information about the country—and that's the added value from the IMF—but for the information at the regional level, the information at the global level, we try to produce and give our best estimate. So there's good reason to be skeptical and we will see what happens.

I think the explanation of the drop in Q4 2008 and the fact that Q4 to Q4 shows the beginning of a new increase is convincing, but I can understand that it makes some surprise to have this average figure. You know average growth year on year is sometimes misleading especially when you're in shaky times, which is the case where we are now.

So, again, I cannot say more than we carefully look at those figures, but I can understand that it creates some reactions.

MR. SINGH: Let me add just one comment on that.

Not in our defense, but I think this is a problem that forecasters face, and there is some evidence in this. If you go back the last 50 years, there have been studies that show that what is most difficult to predict are turning points. It's very easy to predict or project growth when it's in a certain trend. But when you're looking at pluses becoming minuses and minuses becoming pluses, you're looking at turning points, and statistically the evidence shows that is a most difficult area for people to make forecasts.

It's important to be a little bit generous to forecasters from that perspective.

MS. ATKINSON: Okay. Well, thank you very much. Thank you, everybody, for coming.

I do want to acknowledge that we received more than 50 questions online. We were obviously unable to get to them all, and we apologize for that, but we hope that we've covered the main ground.

And the Managing Director, Dominique Strauss-Kahn, will be in Asia later this week. And our Chief Economist, Olivier Blanchard, and Mr. Anoop Singh will also be visiting some countries in Asia, in particular India, and Mr. Singh is going to Bangladesh after Kuala Lumpur.

So thank you all very much indeed.

MR. STRAUSS-KAHN: Thank you.

MR. SINGH: Thank you.


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