Leaders head for crisis summit as economies slide
London, November 14, 2008
World leaders headed to Washington on Friday to discuss ways to protect the global economy from a repeat of the worst financial crisis in 80 years.
With the crisis quickening a global downturn, data from the euro zone later on Friday were expected to show the 15-nation bloc was in recession - something that France just avoided, posting growth of 0.14 percent.
Germany, Europe's largest economy, has reported it is in recession, and Spain said its economy shrank in the third quarter.
Other countries, including Singapore, New Zealand, Ireland and Estonia, have fallen into recession.
Leaders of the G20 developed and emerging countries, which represent 85 percent of the world's economy and two-thirds of its population, will discuss ways to try to ensure the crisis, started by a US housing market crash, is not repeated.
But agreement is unlikely over whether more regulation of markets can protect consumers, savers and companies from the fall-out of such a crisis, when banks failed, savings were lost and small and medium-businesses collapsed.
Washington says there should be no return to greater state control of financial markets. Much of Europe says without more regulation, a repeat of the last year's turmoil is inevitable.
While investors waited to see what policy announcements would be forthcoming, some leaders dampened expectations.
'This will need to be seen as just the starting point,' Mexican President Felipe Calderon told reporters in Mexico City. 'There will be results, but they will be moderate.'
British Prime Minister Gordon Brown called for more co-ordinated measures top spur economic growth.
'There is a need for urgency. By acting now we can stimulate growth in all our economies. The cost of inaction will be far greater than the cost of any action,' he told reporters in New York on Thursday.
European Commission President Jose Manual Barroso said he hoped to draw more emerging economies into global financial institutions such as the International Monetary Fund, saying Europeans were ready to lower their representation to make more room for countries such as China.
'There is an openness to accommodate an increased role of the emerging economies,' the International Herald Tribune quoted Barroso as saying.
France bucks trend
France escaped the clutches of recession, reporting growth of 0.14 percent in the third quarter after a 0.3 percent contraction in the second quarter.
'It's good news and shows that France is not technically in recession,' French Economy Minister Christine Lagarde told RTL radio, when asked about the third quarter figure.
But official third-quarter gross domestic product figures are expected to confirm the 15-country euro zone is in the first recession in the European Central Bank's 10-year history.
Spanish third quarter gross domestic product fell 0.2 percent quarter-on-quarter, its first contraction in 15 years.
The Organization for Economic Cooperation and Development (OECD), the IMF and the World Bank have forecast that advanced economies will contract next year.
Emerging economies have also been hit, analysts say.
China, which has enjoyed a booming economy, reported capital spending on Friday that was slightly lower than expected, the latest in a series of indicators pointing to slowdown for the world's fourth-largest economy.
Some countries have been forced to turn to global lenders for funds to prop up faltering economies.
Pakistan said it expected the IMF and other lenders to provide billions of dollars in loans soon, and China to pitch in with $500 million to avert a balance of payments crisis.
Shaukat Tarin, the country's top economic adviser, told Reuters late on Thursday the government would soon send a letter of intent to the IMF.-Reut