Lecce, Italy: 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 recognized 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.