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G7: is anybody at the wheel?

Thursday, May 26, 2016 - 01:39

Group of Seven leaders have voiced concern about emerging economies as their host, Japanese Prime Minister Shinzo Abe, makes a pointed comparison to the global financial crisis eight years ago. David Pollard reports.

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As G7 photo opps go, it was perhaps an unfortunate choice. Prompting comparisons between driverless cars - and a directionless global economy. And: that economy in peril - according to the G7 host. (SOUNDBITE) (Japanese) JAPANESE PRIME MINISTER, SHINZO ABE, SAYING: "We rigorously debated the global economy, and we agree that it faces a great risk, at this moment." Only, they don't really agree. Plunging commodity prices are one reason Abe drew comparisons with the lead-up to the 2008 financial crisis. But G7 members reportedly differ on whether the situation now is really the same. And on how to deal with it. Calls for more government spending dividing not only G7 members. SOUNDBITE (English) PANMURE GORDON, MARKET COMMENTATOR, DAVID BUIK, SAYING: "Fiscal stimulus in my opinion has got a huge cumulo nimbus cloud hanging over it, because I think it's like insurance that you would describe in our lives as a necessary evil. But the fact remains that nobody can be 100% certain it's doing any good." And if that is the case, then it leaves few options outside of more monetary stimulus. Meaning deeper negative rates and more QE - as per the Bank of Japan and the ECB. But on that too, there are doubts. SOUNDBITE (English) FITCH RATINGS, CHIEF ECONOMIST, BRIAN COULTON, SAYING: "As inflation continues to remain low, then they need to be seen to be reacting. But I think it's more a case of damage limitation, avoiding inflation expectations falling further, than something that's really going to boost growth aggressively." One NGO brought its own G7 leaders to the venue. World Vision hopes these superheroes will help bring real global change. Superpowers though visibly lacking among the real thing - a camera-friendly summit not so growth-friendly yet.

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G7: is anybody at the wheel?

Thursday, May 26, 2016 - 01:39