IMF Chief Economist Says Crisis Will Last A Decade

From Reuters:

The world economy will take at least 10 years to emerge from the financial crisis that began in 2008, the International Monetary Fund's Chief Economist Olivier Blanchard said in an interview published on Wednesday.

Blanchard told Hungarian website Portfolio.hu, in an interview conducted on September 18, that Germany would have to accept higher inflation and a real strengthening of its purchasing power as part of the solution to Europe's problems.

But even though the focus was on Europe's troubles now, he said, the United States also had a fiscal problem which it had to resolve.

"It's not yet a lost decade... But it will surely take at least a decade from the beginning of the crisis for the world economy to get back to decent shape," Blanchard said.

"Japan is facing a very difficult fiscal adjustment too, one which will take decades to solve. China has probably taken care of its asset boom but has slower growth than before, but we do not forecast any really hard landing," he added.

On the debt crisis, Blanchard said that debt reductions were unavoidable but it should be done without stifling growth, walking on a "narrow middle path."

"You can have an economy in which inflation is stable and low, but behind the scenes the composition of the output is wrong, and the financial system accumulates risks."

http://uk.reuters.com/article/2012/10/03/uk-imf-economy-blanchard-idUKLNE89201S20121003