The G8 industrialized nations have begun looking ahead to economic recovery as they consider how to unwind their massive stimulus policies while also warning it was too early to celebrate the end of the global crisis.
Acknowledging “signs of stabilization in our economies,” G8 finance ministers tasked the IMF on Saturday with studying how best to roll back measures introduced to help the global economy once the crisis could be considered over.
But the ministers said it was still too early to shift strategies, as many economies were still stabilizing from the financial and economic turmoil, whose full impact was yet to be felt in some corners of the world.
They backed away from proposals by some countries to give the IMF until the end of the year to complete its investigation, suggesting the group agreed to a compromise. The US and Britain are worried that continental Europe has not done enough to deal with the recession, while more cautious countries like Germany fret about the potential long-term risks posed by the stimulus measures.
The finance ministers’ meeting — meant to set the agenda for a gathering of G8 heads of state next month in L’Aquila in central Italy — was held as several months of improving economic data fueled a rally on world stock markets.
“These early signs of improvement are encouraging, but the global economy is still operating well below potential and we still face acute challenges,” US Treasury Secretary Timothy Geithner said after the meeting, emphasizing it was too early to shift policy.
“Economic and financial recovery ... will be stronger and more sustainable if we make clear today how we get back to fiscal sustainability when the storm has passed,” he said.
The World Bank forecast earlier this week that the global economy will shrink by 3 percent this year, far worse than a previous estimate for a 1.75 percent contraction.
Also See: G8 turns spotlight on European banks
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