"The world after the crisis is not that simple,” World Bank and IMF

At a forum in Montreal on Monday the International Monetary Fund chief Dominique Strauss-Kahn and World Bank President Robert Zoellick were talking about the life after the crisis and made some propositions as to what governments should and shouldn’t do as they try to nurse their economies back to health. These international financial organizations said that the path to global economic recovery is rife with risks and the onus is on policymakers to avoid runaway inflation and other pitfalls that could derail the process.

"We still believe, as we've said for months, that the most credible scenario is that the recovery will take place in the first half of 2010 with the turning point in September, October, beginning of growth at the end of this year, and then really the first positive quarter as Q1 or Q2 in 2010," Strauss-Kahn said.

Still, he noted that the biggest risk to his outlook is countries taking too long to cleanse toxic assets from their banking systems. "You never recover until the cleansing of the balance sheet of the financial sector has been completed," Strauss-Kahn said.

Besides, in order to return confidence to the financial system banks need to disclose not only losses related to U.S. subprime mortgages but other losses linked to the economic slowdown.

"What we are noticing is that there still is a system of credits, or of losses, that are not made public," he said. "These are not things that are linked today to the original subprime crisis, but to the fact that the economic slowdown has rendered a certain number of assets of poor quality and that new losses were registered."

"The loss of confidence comes from the fact that we do not know exactly where the losses are and what they are."

Strauss-Kahn reminded that while there are bright "green shoots" suggesting the worst of the global recession is over the same policies that helped them through the crisis will cost them dearly in years to come as fiscal and monetary stimulus is withdrawn.

Additionally, analysts and experts are also concerned with the threat of spiraling inflation.

"The risk of very rapid inflation at the end of the crisis is a real risk. How are we going to dry up all the markets?" Strauss-Kahn said. "The world after the crisis is not that simple."