The US tried to instill confidence on Thursday that the global recovery was not at risk as finance leaders from around the world gathered to advance a plan aimed at preventing future economic crises.
As finance ministers and central bankers from the world’s top economies who are aiming to find ways to shrink imbalances in order to foster sustainable growth wrapped up initial meetings on Thursday, the latest news underscored the problems faced.
China, the world’s second-largest economy reported a quarter of turbo-charged growth, while the US reported a pick-up in claims for jobless benefits, raising questions about recovery.
“Despite the risks in oil, the financial challenges still the world ... what you see is gradual strengthening in confidence that the world economy is going to be growing at a reasonable rate,” US Treasury Secretary Timothy Geithner said.
To prolong the recovery, G20 officials are expected to flesh out a plan late Friday to build a world economy less prone to the booms and busts that have marked the past two decades.
That would involve shrinking imbalances between export-rich countries such as China and debt-burdened ones such as the US. Economists had said that imbalances contributed to the 2007-2009 financial crisis, as emerging market countries reinvested large surpluses into Western markets and caused excessive risk taking by banks.
At a separate meeting in China on Thursday, the BRICS group of emerging markets — Brazil, Russia, India and China and South Africa — called for a revamped global monetary system that relies less on the dollar and a louder voice in global financial institutions.