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Tuesday 11 November 2008
Beijing plan will help the world, says IMF chief
Mainland’s massive government spending package to boost domestic demand is “good news” that will help the global economy ride out the financial crisis, the International Monetary Fund’s managing director said on Sunday.
Mainland’s massive government spending package to boost domestic demand is “good news” that will help the global economy ride out the financial crisis, the International Monetary Fund’s managing director said on Sunday.
“The IMF is arguing for rather a long time that China should shift its policy from export-led growth to a more domestic-driven growth,” Dominique Strauss-Kahn said after a meeting of G20 finance officials in Brazil’s business capital Sao Paulo.
“So I am very happy to see the decision that has been made by the Chinese. It’s a huge package. It will have an influence not only on the world economy in supporting demand, but also a lot of influence on the Chinese economy itself and I think it is good news for correcting imbalances.”
Beijing on Sunday approved a 4 trillion yuan (HK$4.5 trillion) stimulus package.
But Mr Strauss-Kahn cautioned that the financial crisis could still deal some nasty blows to emerging countries. Though swift action by central banks in advanced economies meant overall “things aren’t going that bad”, he said.
Speaking after a meeting here of finance ministers and central bankers from the G20 group of developed and developing nations, Mr Strauss-Kahn said discussions were dominated by the sharp downward revision of economic growth around the world.
“For the first time in the postwar period we have a negative forecast for growth for advanced economies, and also a large revision for emerging countries,” he said.
“Not only that, there are still some very important downside risks that have to do with shortage of capital in emerging markets.”
Foreign capital inflows that many emerging markets, such as those in Latin America and eastern Europe, had been depending on for their economic growth are “drying up”, he noted, saying: “The whole picture is a rather grey picture.”
Nevertheless, those officials at the meeting, who pull the levers of the world’s major economies, were not panicking, Mr Strauss-Kahn said.
“Things aren’t going that bad, even though markets are frozen and there are other problems, but it has been very well done by the different central banks,” the IMF president said.
“I don’t see at all the central bankers being afraid. They are active and I think that is a good thing.
“One of the main candid and very simple conclusions of the last period is that when you take the right action in public policy it has an influence on the real economy, and that’s exactly what we’re seeing now.”
Asked about divergences within the G20 – notably US resistance to EU calls for deep reform of the financial system – Mr Strauss-Kahn referred to the G20 summit in Washington next Saturday, saying: “If there was already a single voice you wouldn’t need a meeting.”
He declined to predict an outcome of that summit.
“When you have a heads of state and heads of government meeting you can never know what the outcome will be.”
Efforts by Brazil and other emerging countries to portray the IMF as badly in need of an overhaul, and the possibility of the G20 superseding it as a global financial supervisor were overstated he said, observing that the IMF was more international than even the G20 and packed unparalleled expertise.
He also said the IMF had sufficient funds to handle the current manifestation of the crisis, though that could change.
“This is probably the first global crisis and from the point of view of the current situation, the resources of the IMF are probably enough. But tomorrow we don’t know what’s going to happen,” he said.
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Beijing plan will help the world, says IMF chief
Reuters in Sao Paulo
10 November 2008
Mainland’s massive government spending package to boost domestic demand is “good news” that will help the global economy ride out the financial crisis, the International Monetary Fund’s managing director said on Sunday.
“The IMF is arguing for rather a long time that China should shift its policy from export-led growth to a more domestic-driven growth,” Dominique Strauss-Kahn said after a meeting of G20 finance officials in Brazil’s business capital Sao Paulo.
“So I am very happy to see the decision that has been made by the Chinese. It’s a huge package. It will have an influence not only on the world economy in supporting demand, but also a lot of influence on the Chinese economy itself and I think it is good news for correcting imbalances.”
Beijing on Sunday approved a 4 trillion yuan (HK$4.5 trillion) stimulus package.
But Mr Strauss-Kahn cautioned that the financial crisis could still deal some nasty blows to emerging countries. Though swift action by central banks in advanced economies meant overall “things aren’t going that bad”, he said.
Speaking after a meeting here of finance ministers and central bankers from the G20 group of developed and developing nations, Mr Strauss-Kahn said discussions were dominated by the sharp downward revision of economic growth around the world.
“For the first time in the postwar period we have a negative forecast for growth for advanced economies, and also a large revision for emerging countries,” he said.
“Not only that, there are still some very important downside risks that have to do with shortage of capital in emerging markets.”
Foreign capital inflows that many emerging markets, such as those in Latin America and eastern Europe, had been depending on for their economic growth are “drying up”, he noted, saying: “The whole picture is a rather grey picture.”
Nevertheless, those officials at the meeting, who pull the levers of the world’s major economies, were not panicking, Mr Strauss-Kahn said.
“Things aren’t going that bad, even though markets are frozen and there are other problems, but it has been very well done by the different central banks,” the IMF president said.
“I don’t see at all the central bankers being afraid. They are active and I think that is a good thing.
“One of the main candid and very simple conclusions of the last period is that when you take the right action in public policy it has an influence on the real economy, and that’s exactly what we’re seeing now.”
Asked about divergences within the G20 – notably US resistance to EU calls for deep reform of the financial system – Mr Strauss-Kahn referred to the G20 summit in Washington next Saturday, saying: “If there was already a single voice you wouldn’t need a meeting.”
He declined to predict an outcome of that summit.
“When you have a heads of state and heads of government meeting you can never know what the outcome will be.”
Efforts by Brazil and other emerging countries to portray the IMF as badly in need of an overhaul, and the possibility of the G20 superseding it as a global financial supervisor were overstated he said, observing that the IMF was more international than even the G20 and packed unparalleled expertise.
He also said the IMF had sufficient funds to handle the current manifestation of the crisis, though that could change.
“This is probably the first global crisis and from the point of view of the current situation, the resources of the IMF are probably enough. But tomorrow we don’t know what’s going to happen,” he said.
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