G7 Warns Of Mounting Risk From Global Turmoil
08:03 p.m Oct 03, 1998 Eastern
WASHINGTON (Reuters) - Financial leaders from the Group of Seven major industrial nations said Saturday the financial crisis sweeping the globe posed a mounting downside risk to their economies and vowed to work together to promote growth and financial stability.
In a statement released after a meeting of G7 finance ministers and central bankers here, the leaders pledged to cooperate in foreign exchange markets as appropriate and called on Japan to take ''swift and effective'' action to clean up its debt-ridden banking sector and boost its dormant economy.
''Financial market conditions have deteriorated in many parts of the world, leading to a further weakening of growth prospects, especially in most emerging market countries ... In this context, we reaffirmed our view that the balance of risks on a global basis has shifted,'' the G7 statement said.
Noting that inflation is conspicuously low, the group said lack of economic vitality in Asia and elsewhere ''poses increasing downside risks to economic activity.'' Participants reemphasized their commitment to create or sustain strong domestic-demand-led growth and financial stability in their economies. ''In this context, we noted the importance of intensified cooperation among us at this juncture,'' the group said.
The G7 said the United States, Canada and Britain should take ''appropriate action'' to sustain growth, and said it was important that European nations implement structural reforms and reduce their high unemployment rates.
The G7 also expressed concern about the flight of capital from emerging markets and agreed to explore President Clinton's plan to provide ''contingent finance'' through the International Monetary Fund to cash-strapped nations, giving them easier and faster access to fresh capital in times of crisis.
Copyright 1998 Reuters Limited |
