Leading policymakers were unusually candid on Friday in voicing fears that the euro zone’s financial and banking woes could derail the global economic recovery.
The troubles of Greece and other heavily indebted European governments dominated conversations ahead of a meeting of finance ministers and central bankers of the Group of 20 of the world’s top developed and emerging economies, Canadian finance minister, Mr Jim Flaherty, said.
“It is essential to ensure continued recovery that Europe fix its banks. It is essential that certain vulnerable European nations follow through with major fiscal consolidation, and get the job done,” Mr Flaherty told reporters in Busan.
Gatherings such as the G20 are typically an opportunity for officials to radiate confidence, especially when financial markets are in a nervous state, as they are now.
But Mr Flaherty was not alone in his warnings.“We can’t afford to be complacent,” South Korean finance minister, Mr Yoon Jeung-hyun, said.
“Without further and ongoing action from us, the recovery may not remain on track and we may not be able to achieve strong, sustainable and balanced growth,” he said.
South African planning minister, Mr Trevor Manuel, said he could not think of a more challenging time than the present for the Group of 20. Decisions needed taking, he said, to banish the spectre of a double-dip recession.
“It’s important that we all understand just how fragile the recovery is,” Mr Manuel, himself a former finance minister, said.As the ministers got down to work, police boats patrolled near the beach hotel where they are meeting.
Authorities have steeped up security in the southern port city in the face of war-like rhetoric on the divided peninsula after the South accused North Korea of sinking one of its warships.
However, US Treasury Secretary, Mr Timothy Geithner sounded a more optimistic note. — Reuters