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G20 economic spotlight on emerging market pain

Friday, September 06, 2013 - 01:52

Sept 6 - G20 leaders meeting for their annual summit in St Petersburg face a rebounding U.S. economy, a lagging Europe - and fears that the looming withdrawal of U.S. dollars from the global economy will hurt developing economies. Kirsty Basset reports.

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For the first time in three years, Europe's debt crisis is not dominating the G20 summit, held this year in St Petersburg. While Syria dominates the political discussion, economic talks are centred on the impact of the U.S. pulling billions of dollars in stimulus from the world economy, amid concerns developing economies will be hit hard when the Fed cuts down its bond buying program. Standard Chartered's Sarah Hewin. (SOUNDBITE)(ENGLISH) STANDARD CHARTERED'S REGIONAL HEAD OF RESEARCH FOR EUROPE, SARAH HEWIN SAYING: "At the moment what's lacking is certainty about exactly the path that the Fed is going to take and when that's going to start. So once we have more clarification on that, we think some of the volatility in the markets currently will dissipate." There was a sell off in emerging market currencies, stocks and bonds when Fed Chairman Ben Bernanke first raised the possibility in May of cutting the Fed's stimulus program. Brazil, Russia, India, China and South Africa have issued a joint statement, calling for the normalisation of monetary policy to be done carefully. But Bank of New York Mellon's Simon Derrick believes the worst may already be over. (SOUNDBITE)(ENGLISH) SIMON DERRICK, HEAD OF GLOBAL CURRENCY RESEARCH AT BANK OF NY MELLON SAYING: "I think it's probably fair to say that when we see tapering actually kick in there probably will be another knee jerk reaction within the market. I think people are expecting this. We're over the summer lull if you like, markets are a little more liquid. I don't think it's going to be anywhere near as extreme as what we've already seen." The G20 issued a statement saying that the global economy is not yet on a path of recovery. As if on cue, and to the relief of European markets, a below-forecast U.S. jobs report seemed to indicate the Fed may hold off from cutting stimulus, at least for this month anyway.

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G20 economic spotlight on emerging market pain

Friday, September 06, 2013 - 01:52