topics
tools
Expatica countries
Index Last Var.(%)
BEL 20 2117.66 -0.08
DAX 6323.19 -0.26
IBEX 30 6401.2 -2.17
CAC 40 3042.97 -0.16
FTSE 100 5356.34 0.09
AEX 292.76 0.00
DJIA 12454.83 -0.60
Nasdaq 2837.53 -0.07
FTSE MIB 13057.26 -0.74
TSX Composite 11532.48 -0.38
ASX 4120.2 0.96
Hang seng 18800.99 0.47
Straits Times 2787.22 0.52
ISEQ 20 501.76 0.16
You are here: Home News News Focus G20 no quick fix for global economy: analysts

News Focus

archive
Enlarge font Decrease font Text size


03/04/2009G20 no quick fix for global economy: analysts

The huge cash injection of USD 1 trillion for the International Monetary Fund and other finance and trade institutions is unlikely to spark a global economic recovery, say analysts.

LONDON – The G20 London summit will unlikely spark an immediate global economic recovery, but a trillion-dollar funding boost for international lending institutions should help, analysts said.

The G20 meet, called to combat the burgeoning financial crisis and attended by US President Barack Obama, agreed a huge cash injection for the IMF and World Bank to help battle the spreading global recession.

But leaders from the Group of 20 industrialised and developing nations stopped short of any coordinated round of public spending.

"The summit has failed to break any new ground on a global fiscal stimulus," said Capital Economics analyst Julian Jessop.

"But there has at least been agreement on generous increases in funding for the IMF and additional trade credits."

Howard Wheeldon, senior strategist at BGC Brokers, lamented that the G20 package would not scoop the global economy out of recession – but could help prevent a deeper depression.

The G20 closing statement was "nothing that really softens the blow of recession – but perhaps some things that stops it moving to depression," he said.

The Group of 20 industrialised and developing nations will provide more USD 1 trillion (EUR 744 billion) of new resources for the International Monetary Fund and other global finance bodies.

There will be some USD 500 billion of funding, USD 250 billion in special drawing rights and USD 250 billion in trade credit.

G20 leaders want the extra cash to boost liquidity and help embattled countries – particularly in crisis-hit eastern Europe – through the global recession.

The new G20 measures unveiled Thursday will see secretive tax havens named and shamed, new rules on corporate pay, major reforms to the IMF and World Bank, a new push to pass free trade rules and the sale of huge gold reserves to help poor countries.

"G20 leaders have pushed forward on most key areas, promising to do whatever is necessary to restore global growth," said IHS Global Insight economist Jan Rudolph.

"The biggest surprise was the huge increase in IMF resources to around USD 1.0 trillion, which will go a long way to supporting financial stability in the developing world."

British Prime Minister Gordon Brown, hosting the summit, meanwhile boasted that the G20 will have spent USD 5.0 trillion by the end of 2010 on fiscal expansion in a bid to boost their battered economies.

And he insisted that the G20 were all agreed on doing whatever is needed to return the global economy to healthy growth.

"The issues that people thought divided us did not divide us at all. There was substantial agreement to do whatever is necessary to return to growth," Brown said.

In the run-up to Thursday, the United States and Britain had pushed for bigger stimulus spending – but it failed to materialise.

Nevertheless, VTB Capital analyst Andrey Kryuchenkov said that the IMF funding boost would help lift the struggling world economy.

"In the long run it is a positive development and would help global economic recovery," Kryuchenkov said.

"Some of this money could potentially filter through to eastern Europe, which should help to limit the economic fallout in eurozone and speed up the industrial recovery in Europe."

On a downbeat note, Rudolph said that the G20 communique failed to address the issue of purging the financial system of the toxic or high-risk assets that lay at the heart of the credit crunch.

"The weakest point of the deal is a lack of detail of how to deal with the urgent issue of cleansing banks of toxic assets, a problem that continues to choke the financial system and hamper credit flows," Rudoplh said.

"Without fixing the banks, a sustainable economic recovery is not possible.

"These matters, whilst recognised, have been left for individual countries to manage, but with no clear convincing road map yet formulated to restore a healthy banking system."

AFP / Expatica


0 reactions to this article

Be the first person to add a comment

General rating: Not rated yet

Rate article:    Add my rating



0 reactions to this article

Be the first person to add a comment
Discussion Forums

Television in France

Buy fake passports, driver's licenses, identity cards

Eating & Drinking in France

Buy fake passports, driver's licenses, identity cards

Humour in France

Buy fake passports, driver's licenses, identity cards

Shopping in France

Buy fake passports, driver's licenses, identity cards

Films, Shows & Events in France

Buy fake passports, driver's licenses, identity cards

participate in the forums

Inside Expatica
Management culture in France

Management culture in France

This handy guide from Expertise in Labour Mobility includes information on business hierarchy, negotiations, and etiquette.

American associations and clubs in Paris

American associations and clubs in Paris

A listing of organizations in the Paris area that cater primarily to Americans living in France. Updated April 2011.

British associations and clubs in Paris

British associations and clubs in Paris

Our handy guide to the British community in Paris, from cricket clubs to Scottish country dancing lessons to where to find a jar of Marmite.

Anglophone services in France

Anglophone services in France

Here's a short introduction to our Banking section for those living in France, from how to open a bank account to Islamic banking and investments.