IMF: slump has left scars

THE GLOBAL economic recovery has begun but the downturn has left deep, long-lasting scars, the International Monetary Fund&rsquo;s (IMF) chief economist, Olivier Blanchard, said yesterday.<br /><br />&ldquo;The turnaround will not be simple,&rdquo; he said. &ldquo;The crisis has left deep scars, which will affect both supply and demand for many years to come.&rdquo;<br /><br />The economist warned that potential economic output may be lower than it was before the financial crisis struck, adding that sustaining the recovery will require the US to focus on exports, while Asia ups its imports.<br /><br />Blanchard said most countries will see positive economic growth for the next few quarters, although it will probably be too tepid to reduce unemployment, which is not expected to crest until some time next year.<br /><br />He also confirmed fears over higher taxation to deal with the costs of the crisis, saying it was &ldquo;inevitable&rdquo;.