Is the Recession Coming to a Close?
According to the G8 ministers at a recent meeting in Italy, the world’s largest economies are starting to become more stable. However, they do warn that there are still risks to be faced. Consumer confidence appears to be on the rise, interest rates are starting to stabilize and the stock market seems to be on the upswing.
In spite of this optimism, a warning comes from the chief of the US Treasury, Tim Geithner. He says it is too early for governments to start bringing an end to their stimulus packages. He advises that they should remain in place until it is clear that the world is starting to recover economically.
The finance minister of the G8 countries met in Lecce, Italy to lay the groundwork for the G8 summit. They concluded that there is still uncertainty in the global market. According to a spokesperson, “Significant risks remain to economic and financial stability.”
There is a great possibility that unemployment numbers could still continue to rise even after stability occurs in the market.
In their joint statement, the ministers agreed that there are signs of hope, saying “We have taken forceful and co-ordinated action to stabilise the financial sector and provide stimulus to restore economic growth and there are signs of stabilisation in our economies.”
Geithner does agree that there are signs of hope, but cautions, “The global economy is still operating well below potential and we still face acute challenges.”
He went on to say, “I don’t think we’re at the point yet where we can say we have a recovery in place.” In his opinion it is way too early to start thinking of moving away from the economic policies that have been put in place to intervene in the banking crisis that occurred in September, 2008.
The Chancellor of the UK, Alastair Darling said that the economic prospects of Britain are still closely linked with those of the other G8 countries. He told the Reuters news agency, “A lot will depend on other countries making progress: on cleaning up their bank balance sheets; volatility in commodity prices, oil for example. So I think there are reasons to be cautious.”
Just two months before this meeting, the heads of the G* governments met in London and agreed to inject billions of dollars into the global economy. Although the finance ministers at the meeting in Italy agreed to start considering the scale back of the economic stimulus packages, Darling points out that it is very unlikely that this will happen at any time in the very near future. One thing we are absolutely clear about is we are not there yet. No-one’s talking about exiting now, this is some way down the track. We’ve still got to work this through,” he said.
Where the economy is headed is anyone’s guess at the present time. Some sectors of the economy are starting to look a lot better than they were several months ago, but at the same time, businesses that were doing well at that point in time are starting to experience difficulties.
Tags: uk economy, opinion, Tim Geithner, bank, agency