by Xinhua writers Shao Xinlian and Liu Lina

    BEIJING, Sept. 30 (Xinhua) -- Group of 20 (G20) members agreed at the recent Pittsburgh summit to keep the current economic stimulus measures in place while preparing exit strategies to use "when the time is right."

    But when will be the right time for the exit strategies? Experts and policymakers have different opinions on the answer. The International Monetary Fund (IMF) said Tuesday that the design of exit strategies should be one of the top priorities for policy making in the next two years.

    TIMING IS CRUCIAL

    Bank of England Deputy Governor Charles Bean warned last May that policymakers needed to get the timing right on when to start unwinding economic stimulus measures, or risk curbing a recovery or fuelling inflation.

    "Judging the timing of this will not be easy: exiting too early will nip the recovery in the bud; exiting too late will result in building inflationary pressures and perhaps another asset price/credit boom," Bean wrote in a document presented at a G20 central bankers' workshop earlier this year.

    His view is echoed by many experts, who have warned governments to watch for potential inflation pressures as one of the side effects caused by the huge amount of liquidity that has been pumped into the financial system.

    However, they also warned that the recovery remains fragile at the moment: the unemployment rate is hiking while the equipment operation rate is dipping, non-government investment is depressed while consumer demand has not yet recovered. It all seems still too early to unwind the strong stimulus policy.

    Statistics provide an even more gloomy vision. According to the International Monetary Fund, the global economy will shrink by 1.4 percent this year before returning to growth of 2.5 percent next year, up from an earlier projection of 1.9 percent.

    To address this dilemma, G20 finance ministers and central bank governors gathered in London early this month and reached a consensus that only after the foundations for the world economy had become solid, should each country consider stopping its stimulus measures.

    At the Pittsburgh summit, the leaders pledged to sustain a strong policy response "until a durable recovery is secured," and "avoid any premature withdrawal of stimulus." But they also agreed to design exits in the coming months so they could be implemented when the time comes.

Special Report:  Global Financial Crisis