G8 leaders face gravest economic woes
G8 leaders face gravest economic woes owing to surging oil prices, food inflation and a credit crunch that’s depressed global growth.
SAPPORO: Between surging oil prices, food inflation and a credit crunch that���s depressed global growth, leaders from the Group of Eight economic powers face the gravest combination of economic woes in at least a decade when they gather next week.
The outlook has darkened dramatically since last year���s summit in Germany, when the leaders declared the global economy was in ���good condition ��� and oil cost $70 a barrel which seemed high at the time. Since then, the US subprime mortgage crisis has erupted, roiling markets and battering financial firms.
Oil has doubled to above $140 and food prices have jumped, hurting the poor in particular and raising the threat of political instability.
���Things have changed for the worse across the board,��� said Robert Hormats, vice chairman at Goldman Sachs Corp in New York.
Hormats argues that the economic problems now are more serious and widespread than during the Asian financial crisis of 1997-98 , where the pain was largely limited to emerging markets.
���Now you have a financial disorder where the epicenter is the US,��� he said. And fuel and food inflation ���are serious matters that affect large numbers of people.���
Host Japan put global warming at the top of the summit���s agenda, but the dilemma of how to respond to accelerating inflation and slowing global economic growth could grab the spotlight.
Prime Minister Yasuo Fukuda has said he hopes the July 7-9 meeting at a hot springs resort in Hokkaido, Japan���s northern island, will ���show some direction��� in tackling oil and food prices but stressed it was only ���one step��� in a longer process.
On oil, analysts are skeptical that the G8 leaders representing the US, Japan, Britain, France, Germany, Russia, Italy and Canada will come up with much beyond urging major petroleum producers to boost output, reiterating the message of their finance ministers, who met last month in Osaka.
Foreshadowing possible disagreement among the leaders , the finance ministers were divided on where to assign blame for the run-up in oil prices.
Germany, France and Italy held speculators largely accountable, while US and Britain said focus needed to be on boosting production capacity that has barely kept up with growing global demand.
Soaring crude prices have already forced India, Malaysia, and Indonesia to cut subsidies and raise state-set prices on gasoline and other fuels.
Last month, China hiked fuel prices as much as 18%. At same time, prices of corn, wheat, soybeans and other farm goods have surged.
The outlook has darkened dramatically since last year���s summit in Germany, when the leaders declared the global economy was in ���good condition ��� and oil cost $70 a barrel which seemed high at the time. Since then, the US subprime mortgage crisis has erupted, roiling markets and battering financial firms.
Oil has doubled to above $140 and food prices have jumped, hurting the poor in particular and raising the threat of political instability.
���Things have changed for the worse across the board,��� said Robert Hormats, vice chairman at Goldman Sachs Corp in New York.
Hormats argues that the economic problems now are more serious and widespread than during the Asian financial crisis of 1997-98 , where the pain was largely limited to emerging markets.
���Now you have a financial disorder where the epicenter is the US,��� he said. And fuel and food inflation ���are serious matters that affect large numbers of people.���
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Host Japan put global warming at the top of the summit���s agenda, but the dilemma of how to respond to accelerating inflation and slowing global economic growth could grab the spotlight.
Prime Minister Yasuo Fukuda has said he hopes the July 7-9 meeting at a hot springs resort in Hokkaido, Japan���s northern island, will ���show some direction��� in tackling oil and food prices but stressed it was only ���one step��� in a longer process.
On oil, analysts are skeptical that the G8 leaders representing the US, Japan, Britain, France, Germany, Russia, Italy and Canada will come up with much beyond urging major petroleum producers to boost output, reiterating the message of their finance ministers, who met last month in Osaka.
Foreshadowing possible disagreement among the leaders , the finance ministers were divided on where to assign blame for the run-up in oil prices.
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Germany, France and Italy held speculators largely accountable, while US and Britain said focus needed to be on boosting production capacity that has barely kept up with growing global demand.
Soaring crude prices have already forced India, Malaysia, and Indonesia to cut subsidies and raise state-set prices on gasoline and other fuels.
ADVERTISEMENT
Last month, China hiked fuel prices as much as 18%. At same time, prices of corn, wheat, soybeans and other farm goods have surged.
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