The global recovery from recession has begun – the International Monetary Fund (IMF) reports.

But the road ahead will continue to be rocky, says Olivier Blanchard, economic counsellor and director of the IMF’s research department, as parts of the economic system “have broken”.

He explained: “In normal recessions, however disruptive they are to businesses and jobs, things turn around predictably. The current global recession is far from normal.

“Usually, to fight a recession, the central bank lowers interest rates, which results in increased demand and output. People resume buying durable goods such as appliances and cars. Firms start delayed investment projects. Often, an exchange rate depreciation gives a boost to exports by making them cheaper. The lower-than-normal growth during the recession gives way to higher-than-normal growth for some time, until the economy has returned to its normal growth path.

“But the world is not in a run-of-the mill recession. The turnaround will not be simple. The crisis has left deep scars, which will affect both supply and demand for many years to come.”

He added: “Some parts of the economic system have broken. Some firms went bankrupt that would not have in a normal recession. In advanced countries, the financial systems are partly dysfunctional, and will take a long time to find their new shape.”

Blanchard said sustaining the ‘nascent recovery’ is likely to require delicate rebalancing acts, both within and across countries: “An understanding of the issues and the dangers, and some co-ordination across countries, is likely to be as crucial during the next few years as it was during the most intense part of the crisis.”