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As G8 finance chiefs meet:
World awaits recovery
ITALY: Finance Ministers from the G8 leading world powers meet
for talks in Italy on Friday as populations hit by the worst economic
crisis in decades wait for firm evidence of an upcoming recovery.
Signs of an economic recovery have mounted in recent weeks but so
have worries about the rising amount of debt incurred by governments to
fight the crisis and their commitment to cut spending once growth
restarts.
New data out on Thursday showed a rise in US retail sales and lower
US unemployment claims, as well as rising global demand for energy.
But the World Bank forecast the global economy will shrink 3.0
percent this year, far worse than their previous estimate of a
1.75-percent contraction. “Financial markets seem to have broken the
fall over past months but there are clear fragilities, and risks
remain,” World Bank president Robert Zoellick said in a conference call
with reporters.
“The developed economies seem to be contracting at a slower pace but
the effects of the global economic downturn are rippling through the
world and still very much hurting developing countries,” he said.
The two-day meeting in Lecce in southern Italy could also see rifts
on whether Europe should go for US-style “stress tests” to check the
stability of its banks and on how far new rules on global finance should
go.
Germany has argued that such tests on individual European banks could
undermine fledgling economic confidence, while Britain has opposed
stricter monitoring of financial markets proposed by the European
Commission.
US Treasury Secretary Timothy Geithner has said he will urge fellow
finance chiefs at the G8 meeting to stay the course on economic stimulus
spending and financial reforms despite signs the global recession is
easing.
Despite hopes for a recovery, financial markets have been getting
increasingly jittery about how governments plan to scale back massive
debts and spending once economic growth gets underway — so-called “exit
strategies”. Lecce, Monday, AFP |
