Group of Seven Communiqué: Countries Urged to Strengthen Their Economies And Shore Up Defenses Against Instability
| Pages | 66-69 |
Page 66
We the finance ministers and central bank governors of the Group of Seven countries and Wim Duisenberg, President of the European Central Bank, met today with IMF Managing Director Michel Camdessus to review recent developments in the world economy. Ministers and governors also discussed international financial architecture issues.
We discussed developments in our own economies and in the rest of the world. Since our last statement of October 30 [see IMF Survey, November 16,1998, page 360], there have been some encouraging developments, such as the economic and financial stabilization in Asia; calmer financial markets in industrial countries; interest rate cuts in the United States and Europe; and most recently in Japan, progress made to implement policies to strengthen the financial system and stimulate the economy; and the successful introduction of the euro. But financial market conditions have worsened in some regions, and the outlook for global economic growth is somewhat less favorable. The impact of financial crises is now felt beyond the regions where the crises occurred. Against this background, it is of the utmost importance to strengthen in all countries the foundations for sustainable growth of output and employment, social stability, and the macroeconomic conditions for financial market stability.
We remain committed to a domestically based growth strategy that would contribute to achieving more balanced growth among our countries, reducing external Page 67 imbalances, and supporting recovery in emerging market economies. The outlook for price stability in our countries as a whole remains favorable.
In view of the challenges facing each of our economies, we reaffirm the importance of intensified cooperation among us:
- In the United States and Canada, economic growth is expected to slow gradually, but the overall economic outlook remains favorable. In these countries, policy should be directed at maintaining necessary conditions for sustainable growth.
- In the United Kingdom, growth is expected to be lower than last year but to recover thereafter. With a less inflationary outlook, interest rates have been reduced sharply, and economic policies will continue to help create the conditions for sustainable growth.
- In the euro area, growth expectations for 1999 have been lowered. The magnitude of the slowdown may differ among these countries. They agree on the importance of pursuing an appropriate mix of macro-economic policies and structural measures aimed at promoting strong and sustainable domestic-led growth and fostering employment.
- In Japan, short-term prospects remain uncertain. The Japanese authorities have adopted important steps to strengthen the financial system and macropolicies to reinforce growth led by domestic demand and need to push ahead with the implementation of their policies directed to those ends.
We welcome the successful introduction of the euro in 11 member states of the European Union. The euro has been well received in the international financial and foreign exchange markets. The introduction of the euro helped avoid spillovers of turbulence to financial markets in Europe. Economic and monetary policies of the euro area will have significant implications for the stability of the global financial and monetary system.
In view of the increasing integration of the world economy and financial system, we have a special responsibility with regard to...
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