Governments must also enact both financial repairs and reforms. While these reforms are proceeding, questions remain over issues such as "too big to fail" institutions -- those banks and other financial organizations whose collapse could severely damage the economy.

Governments must also address financial consolidation wherever it is needed, he said.

"The need for careful design at the national level, and a collaborative action at the global level may be even more important today than they were at the peak of the crisis," he said.

In response to a question from Xinhua, Blanchard stressed the importance of global collaboration in coping with global economic challenges.

"The main challenge for advanced economies is fiscal consolidation. But there is going to be reluctance to achieve it if the growth is weak, as they need to rely more on exports, like the United States," he said, adding that various countries should enhance coordination on economic and trade issues to avoid a possible "currency war."

The world economy, led by emerging markets and developing countries, is forecast to grow by 4.8 percent in 2010 before falling back to 4.2 percent next year, but a sharper global slowdown is unlikely, the IMF said in its latest World Economic Outlook report.

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