L’Aquila, July 9: Prime Minister Manmohan Singh has struck a note of caution in his meetings at the G8 Summit on the global economic crisis, describing the situation as ?still fragile? despite evidence of some ?green shoots of recovery?. He shared this assessment with leaders he met in the informal setting of the G8, adding that slackness in implementing recovery measures could spell bad news for developing economies.
In fact, at a 45-minute meeting with UK Prime Minister Gordon Brown, another leader regarded for his economic expertise, Singh told him that many of the major indicators are still negative and so the urgency must continue. In this context, he reminded Brown that many of steps agreed at the London G-20 Summit were still to be implemented.
The Prime Minister went on to elaborate this at his meetings with other G5 leaders from Brazil, China, Mexico and South Africa. He assessed that any let-up in pushing through stimulus plans by other countries would have a more adverse effect on developing economies. Any delay, he told them, could lead to ?stagflation? and the developing countries were not as well equipped as developed countries to deal with the impact.
According to foreign secretary Shivshankar Menon, who assists the PM at these meetings, the PM was clear that the recovery needs to be ?inclusive? and one which addresses the concerns of the poor so as to avoid a spectre of mass poverty due to rising unemployment. ?The challenge is to make the poor bankable by investing in improving their skills,? Singh is said to have told other leaders.
On the other issue of reconsidering the dollar as the single reserve currency, a proposal that China had been pushing, there appeared no consensus to take up the matter this time with the G-8. In fact, China too backed off a bit saying that was ?long-term proposal?.
However, Brazilian President Lula came up with an alternative suggestion. To begin with, he said, the G5 countries could consider using their own currencies to settle trade accounts among themselves. It was agreed that this would be looked into by individual countries.
Referring to the series of crises that have affected the world in phases, be it on the food, energy or economic front, Singh told the other leaders in the informal format of their talks that these crises are interlinked and, therefore, solutions have to be interlinked too.
It?s learnt that most were in agreement with Singh on the need to ensure that developed countries do not slip into an impression that the worst may be over. In particular, the developing economies agreed to make a strong case against protectionist tendencies of some developed economies to overcome the crisis. It was in this context that the G5 agreed to push for an early conclusion to the Doha round of talks.