Global Biz
G20 to meet amid uneven recoveries
(Xinhua)
Updated: 2010-06-22 20:04
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BEIJING - While developed countries are struggling to keep their economies growing this year, the main emerging economies have had the exact opposite problem: the risk of over-heating and asset bubbles.
Countries of the Group of 20 (G20), with their varied pace of recovery from the global financial crisis, will review conditions of the world economy and coordinate their macroeconomic policies at a summit this weekend in Toronto to secure the global recovery.
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G20 finance ministers and central bank governors meeting in Busan, South Korea earlier this month said in a statement: "The global economy continues to recover faster than anticipated, although at an uneven pace across countries and regions."
"However, the recent volatility in financial markets reminds us that significant challenges remain and underscores the importance of international cooperation," the statement said.
Within the G20, the most eye-catching performances are the strong economic revival of emerging powers such as China, India and Brazil as a result of stimulus policies and well-maintained fiscal conditions, and developed nations such as Canada and Australia.
Since the Chinese economy hit the bottom in the first quarter of 2009, it has returned to the growth speed of the second quarter of 2007 after a clear V-shaped recovery.
Brazil's economy grew 9 percent in the first quarter of this year, the highest for the past 19 years. India's GDP grew 8.6 percent in the same period, while Argentina's economy rose 6.4 percent, back to its pre-crisis level.
Canada, which suffered the least impact from the crisis among advanced economies, recorded 6.1 percent growth in the first quarter, the highest since 1999. Australia registered 2.7 percent growth thanks to its interest rate adjustments.
The United States falls into the second best category. By and large, its recovery is stable and evident, but fragile and weaker than expected. The US economy walked out of recession in the second half of 2009, recording 2.2 percent, 5.6 percent and 3.2 percent growth respectively in the third and fourth quarter of 2009 and the first quarter of 2010.
Japan's economy has also returned to the track of recovery. Its economic growth in the first quarter reached 5 percent year-on-year, the fourth positive number in a row. Thanks to strong foreign demand and increasing domestic demand, Japan's deflation has been eased.
Compared with other members of the G20 bloc, the EU countries' recovery is the weakest. Germany's economy grew 0.2 percent in the first quarter, France 0.1 percent and Britain 0.2 percent.
Stagnating domestic consumption, falling corporate investment and growing government fiscal deficits, among other things, have hindered the pace of the EU's recovery.
The sharply different but equally dangerous scenarios within the G20 have drawn deep concern from within world financial circles.
Nouriel Roubini, professor of economics at New York University's Stern School of Business, said recently that advanced economices faced years of anaemic growth and the risk of a double-dip recession while, in contrast, some emerging markets risked overheating and were showing symptoms of a potential asset bubble.
IMF Managing Director Dominique Strauss-Kahn said Brazil's economy could grow too quickly and needed to be cooled down.
Moody's Investors Service warned Brazil's inflation rate would rise from 4.3 percent at the end of last year to 6 percent this July, nearing the alert level of 6.5 percent.
Financial advisory company Merrill Lynch forcast that China, India, Russia and Brazil's inflation could hit 3.4 percent, 7.9 percent, 6.1 percent and 5 percent this year.
At this critical juncture, controling inflation and the exit of stimulus measures to avoid overheating and bubbles forming is a priority for developing countries. While for advanced economies, cutting fiscal deficits and keeping in place economic rescue plans are urgent tasks.