Recovery fragile IMF head warns

WASHINGTON - Reiterating the message that first signs of world economic recovery remain susceptible to reversal, Michel Camdessus, the director of the International Monetary Fund, said large nations must pledge greater co-operation to sustain growth when finance ministers gather for meetings here later this week, writes David Usborne.

He made his remarks as members of the Clinton administration sounded sombre warnings that the apparent recovery of the American economy should not be overstated and is still insufficient to create new jobs.

Preparing for the semi-annual IMF/World Bank meeting tomorrow and subsequent talks among finance ministers from the Group of Seven countries, Mr Camdessus said it was vital that joint steps be taken to preserve the momentum towards worldwide recovery. He praised recent first steps towards greater co-operation between the US, Germany and Japan.

'We will send a strong message of confidence to the world that we will take co-ordinated actions to go from the present slack to sustained growth', he said.

Leon Panetta, the US Budget Director, offered a cautious assessment of the US economy. In controversial remarks to US correspondents, he said he remained 'very nervous' about the national economic picture. He said that the optimism that followed President Clinton's election and a Christmas shopping boom signified only a 'shadow recovery'. 'I sense that confidence has diminished somewhat. I think there's a weakness out there', he said.

His remarks echoed warnings earlier this week by the Treasury Secretary, Lloyd Bentsen, that he did not expect US growth to rise to levels sufficient to fuel the creation of new jobs. First-quarter figures due out tomorrow are expected to show growth hovering at between 2 and 2.5 per cent.

Despite these assessments, the US Conference Board, which offers regular reports on sentiment among consumers, said yesterday that confidence during April had strengthened slightly, after three months of falls.