IMF's Strauss-Kahn says more stimulus may be needed

By Daniel Flynn

L'AQUILA (Reuters) - The world economy is on track for recovery early next year but more stimulus measures may be needed in certain countries to exit the crisis, IMF Managing Director Dominique Strauss-Kahn told Reuters on Thursday.

Speaking at a meeting of the Group of Eight industrial nations, Strauss-Kahn said high debts would be one of the main problems as governments draft exit strategies from the downturn but it was too early for them to start tightening their belts.

"We are not out of the crisis, but we are on the right track to exit the crisis. We have forecasts saying the recovery will come in the first half of 2010 but that doesn't mean that everything has been done," he said in an interview.

"We still have to work and sometimes, depending on the situation of the country, some more stimulus may be needed," he said, without identifying individual economies.

The IMF on Wednesday raised its forecast for world economic growth next year to 2.5 percent, from an April forecast of 1.9 percent, but said the global recovery would be hesitant.

The G8, gathered in the central Italian town of L'Aquila, agreed on Wednesday the world economy faced "significant risks" still and said it was too early to unwind the stimulus measures put in place to end the deepest recession in living memory.

"If we...begin now to tighten the fiscal policy, then we take the risk of killing the famous green shoots," Strauss-Kahn said.

Among the threats to the global recovery, he cited the possibility of a sharp rise in oil and commodity prices and the state of the financial sector in many parts of the world.