The global economy has likely bottomed out, but employment conditions are “dire” and stimulus is needed across Asia to spur domestic demand, Japan’s prime minister said.
“Prime Minister Hatoyama mentioned that at the moment the global economy is showing signs of recovery, mainly in Asia,” Japanese Foreign Ministry spokesman Kazuo Kodama quoted Japanese Prime Minister Yukio Hatoyama as telling Asian leaders gathered for a summit meeting in the Thai resort town of Hua Hin yesterday.
“The economic conditions of the global economy seem to have bottomed out, yet there is no room for complacency because the employment situation is still getting worse and in dire condition,” he said.
He said Hatoyama shared a view expressed at the meeting by Asian Development Bank (ADB) president Haruhiko Kuroda that Asian economies need to stimulate domestic demand along with regional demand to become less dependant on the US market.
“Rebalancing of the sources of growth in Asia is a very important challenge,” he said, quoting Hatoyama.
He said Hatoyama had emphasized the implementation of an exit strategy for withdrawing fiscal and monetary support would be premature.
The ADB’s Kuroda shared Hatoyama’s sentiments.
“Indeed Kuroda also mentioned the timing of an exit strategy should be carefully examined,” Kodama said. “He said ‘It shouldn’t be too late and shouldn’t be too premature.’”
The Japanese prime minister also urged a continued “fight against protectionism in all forms,” Kodama said.
Meanwhile, British Prime Minister Gordon Brown said it would be “suicidal” to suddenly cut off the government’s fiscal stimulus in the economy, in his weekly podcast on Saturday.
Brown, who was speaking on the 80th anniversary of the Wall Street crash, said “times were still tough,” but confidence was beginning to return in some areas of the British economy.
On Friday, figures showed the UK’s economy contracted in the third quarter of this year, quashing hopes the downturn was ending and instead marking the longest recession on record.
Brown said the economy would return to growth by the turn of the year, and pledged to make reform of the financial sector, blamed for the downturn, a reality, acting on excessive banking bonuses.
“Although there are signs that confidence is beginning to return in some areas, we need to be cautious,” he said in the podcast released on the 10 Downing Street Web site. “Now more than ever is the time for steady and clear policies.”
“That is why it would be suicidal to put recovery at risk by suddenly cutting off the funding and investment that is supporting young people, families and businesses throughout the most challenging times in a generation,” he said.
Brown did not give further details, but a Downing Street spokeswoman said he was referring to the government’s fiscal stimulus, which has amounted to billions of pounds.
The main opposition Conservative Party, which is well-ahead in opinion polls, has promised quick and sharp cuts in public spending to stem a record government deficit if it comes to power, as is expected, in a national election that has to be held before next June.
Brown said he would be discussing the issue of international cooperation with EU leaders in Brussels this week.
“What matters is what Europe does,” he said. “We need a plan to further mobilize our resources in support of businesses and jobs, including an ambitious European Union target on apprenticeships for the future.”
He said the fight against a second depression was being won by those countries which rejected protectionism.
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