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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: E who wrote (6225)	9/7/1998 12:03:00 PM
From: Worswick	Read Replies (2) \| Respond to of 9980

For Private Use Only (C) South China Morning Post Monday September 7 1998 Fresh concerns for world economy as leaders struggle for solution SHEEL KOHLI in London World financial markets look in serious danger of slipping into a fresh wave of turmoil after a series of meetings between financial leaders brought no solutions to the crisis of confidence gripping economies from Latin America to Asia. A key meeting between United States Treasury Secretary Robert Rubin and Japanese Finance Minister Kiichi Miyazawa in San Francisco at the weekend ended without firm commitments from Japan that it would implement urgent steps to galvanise its economy. Alan Greenspan, chairman of the US Federal Reserve, who later joined the two men for dinner, warned that it was inevitable the crisis would have an impact on the US economy. "It is just not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress," Mr Greenspan said. Russia's acting Prime Minister Viktor Chernomyrdin faces a crucial vote in the Duma today over whether he should be confirmed in his post and be allowed to push through ambitious reforms aimed at returning stability to Russia. But most analysts believe the key to restoring global stability lies with credible economic reforms in Japan. "The world needs Japan to rise to the economic challenge," Mr Rubin said. "I'd like to hope that the kinds of discussions we've had will move things forward, but ultimately what's going to matter is what Japan does." Japan, however, is still continuing to indicate it believes that it is doing enough to bolster its economy, and Mr Miyazawa said he recognised "very well" the need for recovery, repeating the mantra of previous Japanese governments that it was taking "all possible steps to promote financial stability". US President Bill Clinton sought to reassure his domestic audience by claiming that the US economy was "the strongest it's been in a generation" and that its fundamentals were "sound". "Let's stay on the right track and take strong steps to steer our nation through the new global economy so that we can continue to widen the circle of opportunity as we approach the 21st century," he said. But officials said Japan and the US had agreed there was a full-blown crisis looming in the global economy, although they found little common ground on how to avert it. The lack of agreement prompted British Prime Minister Tony Blair, who is president of the Group of Seven leading industrialised nations, to call an emergency meeting, hosted by Britain, of G7 deputy finance ministers this week. Mr Blair's spokesman said the meeting had been called because there was clearly "an absence of political authority in Russia" and a crisis was threatening to envelop all countries. Yesterday, the heads of 10 Latin American states met and discussed the crisis. "There exists a very serious worry in each of our countries from what has occurred in these past weeks," said Mexico's President Ernesto Zedillo. "If this continues, we would be at risk of the entire world economy entering a state of recession," he said. Yesterday, the Central Bank of Brazil raised its benchmark interest rate by 10 percentage points in a bid to staunch an outflow of capital that has reached US$1 billion a day amid concerns that Brazil's currency, the real, would be devalued. International Monetary Fund managing director Michel Camdessus said the situation in Latin America was now becoming dangerous, with a "degree of panic".