At a recent informal meet in Canada, Finance ministers from the world’s top seven industrialised (G7) nations wound up their informal chats, summed up that the worst for the economic crises was over. But at the same admitted that the recovery from the global recession is still weak.
Expressing cautious optimism over the recovery, they said their governments would continue with stimulus spending to speed up the recovery process.
This is important, because the world economy stands in a very vulnerable state at the moment and one misguided step can make the economy slip back to the state it was a year back or maybe worse.
This is IMF’s take on the present situation:
THE GLOBAL economy appears to be recovering and the worst is definitely over, chairman of the International Monetary Fund Youssef Boutros-Ghali said last week.
However, Mr Boutros-Ghali, who is also the Egyptian minister for finance, indicated his apprehension by adding that the global economy is “not out of the woods yet”.
IMF managing director Dominique Strauss-Kahn warned that advanced economies, in trying to plug loopholes in financial regulation, risked creating inconsistent regulatory regimes that result in fresh problems of co-ordination.
“The rules of the game have to be almost the same or they have to be consistent,” he said.
The three key issues currently on the IMF agenda are:
– financial sector reform,
– mutual assessment of the G20 economies and
– fund quotas and governance
To sum up, after a deep and widespread contraction in economic activity and a significant drop in output and employment, policy makers, financial analysts, and media pundits all appear to be heartened by the news from different parts of the world that the worst is over. The main concern now is about the strength and the shape of the recovery.