Economic recovery plan eludes G8

L’AQUILA, Italy – Group of Eight (G8) leaders have failed to bridge differences over combating the steepest recession since World War II, letting each country decide when to stop infusing money into the economy.

US President Barack Obama pressed for the door to remain open to more stimulus measures as a renewed stock market drop stirred concern that the US$2 trillion (N$16,4 trillion) spent worldwide so far had not jolted consumers and businesses back to life.’Exit strategies will vary from country to country, depending on domestic economic conditions and public finances,’ leaders of the eight economies – the US, Japan, Germany, Britain, France, Italy, Canada and Russia – said in a draft statement on Wednesday in L’Aquila, Italy.Divergences over what to do next underscored the G8’s limited room for manoeuvre after the biggest borrowing spree in 60 years failed to halt rising unemployment and left investors doubting the strength of the recovery.China is among the five developing market economies – along with Brazil, India, Mexico and South Africa – that are participating in the summit for the fifth consecutive year, joining yesterday to discuss bringing them on board, as well as aid and development.Also joining were nine African nations and a forum on climate change.The summit will discuss ways to widen the G8 further, amid growing sentiment that the world’s most industrialised nations can no longer claim leadership on the global political and economic agenda.’It’s a warning not to take the foot off the accelerator just yet, as economies still need as much stimulus as possible,’ said David Page, an economist at Investec Securities in London. ‘It’s important not to react too soon to early signs of a pickup or take false comfort from them.’Obama straddled the issue on Tuesday, telling ABC News that spending more borrowed money would be ‘potentially counterproductive’.Wednesday’s G8 draft, which might be amended before the meetings end, embraced options ranging from the Obama administration’s look at a second stimulus package to Germany’s insistence on shifting the policy focus to deficit reduction.’There is still uncertainty… in the system,’ said Mike Froman, the deputy US national security adviser. While exit strategies could be drafted, it was not ‘time to put them into place’.German Chancellor Angela Merkel is the leading opponent of additional stimulus.At last month’s EU summit she called for ‘a reliable and credible exit strategy’.Merkel, campaigning for re-election in September, warned against billowing budget deficits, which would rise in the EU to an average of six per cent of gross domestic product this year from 2,3 per cent last year, according to EU forecasts.The 16-nation euro economy has shown signs of resilience since shrinking 2,5 per cent in the first quarter, the most since the currency’s birth in 1999.While measures of business confidence, manufacturing and services have ticked up, job cuts by companies have pushed up unemployment to 9,5 per cent in May, a 10-year high.In Britain, consumer confidence rose to an eight-month high last month, the government said, adding to evidence that the economy is bottoming out.UK Prime Minister Gordon Brown is still seeking an insurance policy against a lunge back into recession and called for more lending by banks bailed out with public funds.Canadian Prime Minister Stephen Harper occupied the middle ground, saying the first priority was to spend wisely what had already been committed. -Business Report