TOKYO (AFX-ASIA) - IMF managing director Horst Koehler said Japan needs to implement more aggressive monetary easing and start to tackle bad loans within the banking sector, the Financial Times reported. "I think there is an awareness that the time is over for talk and the time is now for taking action," Koehler said. "I do think more can be done, particularly by the economic policy people in accelerating structural reforms," he said, while welcoming the European Central Bank's decision to cut rates this week. Koehler said he expects the US economy to show signs of recovery by the end of the year despite terrorist attacks last week and the sharp decline of the airline industry. He said that the recovery of the global economy was likely to be "a bit less strong than expected." "There is no doubt that the downside risks have increased," Koehler said. "Uncertainties are higher than before and the impact on confidence, particularly consumer confidence and business confidence, will be crucial," he said. However, he insisted there will be no global recession, adding that the IMF's forecast for global economic growth will not dip below 2.5 pct. Koehler said the fundamentals of the world economy supported the IMF's positive forecasts for growth, and he praised the swift action by central banks to support financial markets as Wall Street reopened this week. "I do think the decisions of the central banks in the US, Europe and all over the world to inject liquidity and cut interest rates is not only a powerful demonstration that there is a policy response but that this policy response will have a positive impact," he said. However, he warned that the prospects for Latin American countries had worsened as a result of last week's attacks, saying "the difficulties have increased for Argentina and Brazil". But he expressed confidence in Argentina's policies for emerging from its financial crisis, and in Brazil's ability to attract foreign investment. He said it was premature to discuss shifts in IMF policy towards countries and regions linked to the terrorist attacks against the US. He said Pakistan was in full compliance with the terms of its IMF standby loan programme.