Rich nations, rising economies discuss inflation threat

Rich nations, rising economies discuss inflation threat
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First Published: Wed, Jul 09 2008. 10 55 AM IST
Updated: Wed, Jul 09 2008. 10 55 AM IST
Japan: Rich nations and rising economic powers including China and India met today to seek ways to rein in surging oil and food prices that are taking their toll on the global economy.
The leaders of the Group of Eight industrialized nations held an expanded summit in northern Japan with their counterparts from Brazil, China, India, Mexico and South Africa to discuss the world’s fragile economy.
The presence of the energy-thirsty emerging nations reflects a global economic landscape that has been transformed since the first informal summit of the world’s richest countries was held in 1975 after the first oil shock.
The G8 nations -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- warned this week that oil and food prices “pose a serious challenge to stable growth worldwide”.
But with the exception of Russia, the G8 does not include any major oil exporters, giving them little scope to cool red-hot oil prices, while most of the growth in energy demand is coming from booming emerging economies.
Oil prices have risen five-fold since 2003, hitting record heights close to $147 a barrel last week. Rising food prices meanwhile have pushed 100 million people below the poverty line, according to World Bank estimates, and have sparked protests and even riots in some parts of the world.
During talks in the Japanese spa resort of Toyako, the five emerging economies “expressed hope for further cooperation with the G8 on global issues, especially the food crisis,” another Japanese official said.
They stressed the importance of cutting or abolishing agricultural subsidies in developed countries. Some leaders expressed concern that “surging oil prices and the use of biofuel are both affecting the price of food,” the official said.
Brazil, whose President Luiz Inacio Lula da Silva joined the talks here, is the world’s leading producer of ethanol, which is hailed by advocates for reducing emissions caused by fossil fuels.
But critics say ethanol’s popularity has exacerbated a crisis of spiralling food prices by stepping up demand for edible crops. The G8 rich nations on Tuesday agreed to explore ways to reduce the impact of biofuels on food prices and to accelerate development of second-generation biofuels made from the inedible parts of plants.
The major rich and developing nations agreed to work together for a long-term reduction of carbon emissions but failed to set any specific goals.
“Climate change is one of the great global challenges of our time,” said a statement issued after a summit here with leaders of 16 nations including the United States, China and India.
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First Published: Wed, Jul 09 2008. 10 55 AM IST
More Topics: G8 | Summit | inflation | food crisis | oil |