The global economic downturn has shown signs of easing in recent weeks, although significant risks remain, U.S. Treasury Secretary Timothy Geithner said before a meeting of G20 officials in Washington on Friday.
Writing in the Financial Times, Geithner said the decline in world trade may be abating and conditions in some financial markets have improved.
However, he warned that the 2009 outlook was challenging, with the global economy expected to shrink for the first time in six decades and world trade forecast to suffer the worst collapse since World War Two.
“In recent weeks, there have been some encouraging signs that the global economic downturn may be slackening,” he wrote. “Conditions in some financial markets have improved and the decline in world trade may be abating.”
He urged leaders of the G20 group of rich and developing nations to “keep at this process of repair and reform” to help the recovery.
Finance ministers and central bankers from the G7, which groups the United States, Britain, Canada, France, Germany, Italy and Japan, meet on Friday afternoon before an evening gathering of the larger Group of 20 that includes key emerging market countries like China, India, Brazil and South Korea.
“The G20 nations must follow through on their commitment to deliver the fiscal, monetary and financial policies necessary to restore growth,” Geithner wrote.
The United States has moved aggressively to stabilise and fix its financial system and restore credit flows, he added.
Most other countries will follow suit in a collective fiscal response by the G20 for 2008-10 estimated by the International Monetary Fund (IMF) to be worth $5 tillion (3.4 trillion pounds), he said.
“Our task now is to ensure the effective implementation of these programmes and to narrow the growth shortfall,” Geithner wrote. “The IMF must be proactive in holding our feet to the fire of our good intentions.”
Plans to put in place $250 billion to support the IMF are substantially completed and the IMF has taken the first steps towards allocating $250 billion of Special Drawing Rights.
“Real progress requires time, and significant risks and challenges remain,” Geithner added. “Thus, it is critical that we continue to act together to strengthen the basis for global recovery.”
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