GENEVA, Switzerland - March 23, 2009 - The world is in a dire economic crisis, but no recovery is possible until the financial sector is cleaned up, the head of the International Monetary Fund said on Monday.

The crisis will push millions into poverty and unemployment, risking social unrest and even war, and urgent action is required, IMF Managing Director Dominique Strauss-Kahn said.

"Bluntly, the situation is dire," he told a meeting on the crisis at the International Labor Organization, a United Nations agency representing unions, employers and governments, which studies labor issues.

Strauss-Kahn was talking less than two weeks before a summit of the G20 leading nations on April 2 to tackle the crisis.

As the crisis spills over into developing countries, millions of people will be pushed back into poverty and hardship, said Strauss-Kahn.

"All this will affect dramatically unemployment and beyond unemployment for many countries it will be at the roots of social unrest, some threat to democracy, and may be for some cases it can also end in war," he said.