08 July 2009

G8 Leaders Focused on Global Economic Recovery

President Obama, left, is greeted by Italy’s Prime Minister Silvio Berlusconi at the G8 Summit in L’Aquila, Italy, July 8.

By Merle David Kellerhals Jr.
Staff Writer

Washington — Leaders of the Group of Eight major industrialized nations believe the outcome of the economic crisis is still uncertain and that significant risks remain to global economic and financial stability.

“We agreed on the need to prepare appropriate strategies for unwinding extraordinary policy measures to respond to the crisis once the recovery is assured,” the world leaders said in a statement released July 8. “These exit strategies will vary from country to country depending on domestic economic conditions and public finances, and must ensure a sustainable recovery over the long term.”

Repairing the battered financial sector, which includes stabilizing financial markets and normalizing banking activity, is an urgent priority, the leaders’ statement said, to ensure a permanent economic recovery.

The Group of Eight (G8) – Britain, Canada, France, Germany, Italy, Japan, Russia and the United States – are meeting in the mountain town of L’Aquila, Italy, for annual talks on the global economy, development efforts in Africa, climate change and a host other issues from North Korea and Iran to Middle East peace efforts, terrorism and maritime piracy off the coast of Somalia.

“Stable and sustained long-term growth will require a smooth unwinding of the existing imbalances in current accounts,” the statement said.

The G8 leaders said that while there are signs of economic stabilization, which includes recovery in stock markets, a decline in interest rates, and improved business and consumer confidence, significant risks remain. The leaders said they are committed to withdrawing stimulus spending, but only when recovery is more certain.

“We reconfirm our commitment to keep markets open and free and to reject protectionism of any kind,” the statement said. “In difficult times we must avoid past mistakes of protectionist policies, especially given the strong decline in world trade following the economic crisis.”

The summit leaders will meet July 9 with leaders from the Group of Five emerging economies — Brazil, China, India, Mexico and South Africa, plus Egypt, which was invited to attend by summit host Italy. As host, Italy also sets the agenda and chairs the summit.

The 14 nations are expected to issue a communiqué July 9 supporting efforts to conclude the Doha round of trade-liberalization talks next year. The trade initiative was launched in 2001 to help poorer nations enhance their economies through more liberal trade practices, but the talks have been stymied by opposition to proposed tariff and subsidy cuts.

President Obama will chair a meeting on July 9 of the 17-nation Major Economies Forum on managing climate change. The annual summit concludes July 10 with a working session on development in Africa and a session on world food security.

For more on the summit, see Group of Eight Summit: Taking Stock, Looking Ahead.

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