Washington
11 April 2008
Finance ministers from seven major industrial nations are meeting in Washington in the midst of a continuing financial crisis that has slowed growth and boosted inflationary pressure. VOA's Barry Wood reports.
The meeting at the U.S. Treasury is focused on what can be done to lubricate credit markets still reeling from the US home mortgage debacle that surfaced eight months ago.
The ministers from Western Europe, North America and Japan are also conferring with leading commercial bankers, seeking their counsel on what needs to be done to reactivate credit markets and boost investor confidence. The heads of the International Monetary Fund and the World Bank are also taking part.
The US sub-prime crisis has spread worldwide and its biggest effects have been a slowdown in economic growth and a continued sharp rise in commodity prices that has accompanied a decline in the value of the dollar. The world economy has not faced the dual problem of slowing growth and high inflation since the 1970s.
Specialists at the IMF say the inflation problem has become particularly acute in Asia where the price of rice-the food staple-has shot up by 75 percent since the first of the year. Chinese inflation has reached eight point three percent and is much higher in other Asian nations.
David Burton, the head of the IMF Asia department believes that a faster revaluation of the Chinese currency could alleviate inflationary pressure.
"It (the value of the RMB or yuan) has moved quite fast against the dollar since late last year, but looked at in effective terms (against other currencies) it hasn't moved very much at all. And I think you find the same thing if you look at India as well," he said.
The IMF is predicting that the U.S. economy will enter a recession this year and that global growth will decelerate to its slowest pace in five years (3.7%). In a further sign of a U.S. slowdown, consumer confidence in April fell to its lowest level since 1982. The U.S. economy has shed 250 thousand jobs since the beginning of the year.
Finance ministers from around the world are meeting in Washington Saturday and Sunday at the regularly scheduled spring meeting of the IMF and World Bank.