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| G-8 nations see signs of economic recovery |
| Press Trust of India / Lecce (Italy) Jun 14, 2009, 16:16 IST |
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Citing "signs of stabilisation" in their economies, G-8 finance ministers have decided to ensure that such trends emerging in the global economy should be nurtured and asked the IMF to study exit strategies to "unwind" their hefty stimulus packages.
On macroeconomic conditions, the ministers recognised that the coordinated policy action implemented so far has borne some fruit, citing a recent rise in stock prices, a decline in interest rate spreads, and improved business and consumer confidence.
"There are signs of stabilisation in our economies," said a joint statement of the ministers from the G-8 countries -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- after their two-day meeting in Lecce, Italy.
"I was left with a strong impression that each country has the feeling that the economy is bottoming out," Kyodo news agency quoted Japanese Finance Minister Kaoru Yosano as saying in the southern Italian city last night.
But the ministers agreed not to relax their ongoing efforts until the global economy moves back onto a self- sustained recovery track and called for vigilance over persisting downside risks such as worsening employment trends.
"Even after output growth begins picking up, unemployment may continue to increase," the ministers said, adding that the countries will take all necessary steps to ease the impact of the crisis on employment.
The G-8 ministers said they discussed "appropriate strategies" for how to find a way out of big fiscal spending once their economies recover.
They, however, noted that the framework for unwinding the unusual measures taken so far to fight the global economic crisis should "vary from country to country."
US Treasury Secretary Timothy Geithner also warned after the meeting that nations should not implement policy restraint too early as the global economy has yet to enter a recovery phase despite recent signs of improvement.
"I don't think we're at the point yet where we can say we have a recovery in place," he said.
But he echoed the G-8 statement's call for charting the future course for the restoration of fiscal balances, saying financial and economic recovery "will be stronger and more sustainable if we make clear today how we get back to fiscal sustainability when the storm has finally passed."
To get a better picture of when to reduce the governments' involvement in economic activity, the G-8 asked the International Monetary Fund to carry out a study.
"We asked the IMF to undertake the necessary analytical work to assist us with this process," the statement said.
The meeting noted that the situation remains uncertain and countries should remain vigilant to ensure growth through stable financial markets and strong fundamentals.
The ministers also reaffirmed the importance of combating all forms of money laundering and the financing of terrorism.
In addition to macroeconomic issues, major items on the meeting agenda were climate change, food security, financial regulation and strengthening the lending capacity of international organisations to assist developing countries.
The ministers discussed a set of common principles and standards for international economic and financial activity.
The G-8 ministers said they were committed to the effective and timely implementation of financial measures against North Korea for its recent nuclear test.
Italy, which chairs this year's G-8 summit, is interested in formulating a package of guidelines, now named the Lecce Framework, to prevent a repeat of the global economic crisis.
The idea is to stipulate what should and should not be done in areas such as corporate governance and executive pay.
The results of the G-8 finance ministers meeting will serve as important input for discussion at the July 8-10 summit in the central Italian city of L'Aquila.
The outcome could also have some influence on the course of the next Group of 20 financial summit in Pittsburgh in September, which some think could be the last meeting of its kind after the first held in Washington in November, when the global financial crisis deepened, and the second in London in April.
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