G8 sees economies stabilising, recovery uncertain

Written by Reuters
Saturday, 13 June 2009 21:11
Source: http://www.theedgemalaysia.com/business-news/16293-g8-sees-economies-stabilising-recovery-uncertain.html


LECCE (Italy): The Group of Eight (G8) had on June 13 said they believed their economies were stabilising but recovery from the credit crisis remains shaky, according to Reuters

The G8 finance ministers said in an end of meeting statement there were "signs of stabilisation in our economies, including a recovery of stock markets, a decline in interest rate spreads, improved business and consumer confidence".

"But the situation remains uncertain and significant risks remain to economic and financial stability," the ministers said in the communique after the two-day meeting in southern Italy.

The ministers confirmed they had started to consider ways to unwind economic rescue measures once a recovery was certain. The International Monetary Fund was asked to analyse possible "exit strategies" from radical stimulus programmes.

The G8 wants to reassure nervous bond markets, which have been pushing yields up sharply because they fear heavy state spending and ultra-low interest rates could fuel inflation and cripple state finances.

But the ministers, noting that unemployment might continue to increase even after production picked up, made clear that countries were unlikely to tighten policies any time soon.

"We must remain vigilant to ensure that consumer and investor confidence is fully restored and that growth is underpinned by stable financial markets and strong fundamentals," they said, pledging more stimulus if needed. - Reuters