The global economy will likely avoid sliding back into crisis despite Europe’s debt problems and uncertainty over the US and Chinese economies, South Korea’s finance minister said yesterday.
“The global recovery ... now stays on its upward cycle and I believe that it will not likely face a double dip down the road,” Yoon Jeung-hyun told Yonhap news agency.
PHOTO: EPA/YONHAP
Financial policymakers and central bankers will gather today for a two-day conference hosted by the IMF and South Korea in Daejeon, south of the capital Seoul.
The agenda will include discussions on the future of economies in the Asia-Pacific region and their role in preparing for the post-crisis era.
Yoon said the momentum of recovery could be undercut by Europe’s debt problems and uncertainties over recovery in the US and Chinese economies.
However, he said that the economy was expected to continue “its normalization process toward the pre-crisis level with little chances of falling into a recession.”
The IMF’s latest economic forecast for this year, released last week, is for growth of 3.3 percent in the US, the world’s biggest economy, 9.2 percent in developing Asia and just 1 percent in the eurozone.
Yoon also dismissed reports that a proposed tax on the world’s largest banks to curb excessive financial risk-taking, which has been discussed by the G20 major economies, might have to be ditched because of differences.
“The issue is being discussed very actively among member countries,” Yoon said.
“Global cooperation can be kept alive if things are maintained within the standards,” he said, adding the views of each nation would be sought in time for the G20 meeting in Seoul in November.
However, for eurozone, the latest chapter in the debt crisis will be “stress tests” of European banks to determine if they can withstand a major shock like the default of a key debtor or another serious economic downturn.
Tests of 91 banks, accounting for 65 percent of the European banking system, are to be released on July 23 amid hopes they will ease tensions on markets where many investors fear the banks may have hidden some of their problems under the carpet.
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