Brussels, 13/04/2007 (Agence Europe) - As a prelude to the spring meeting of the International Monetary Fund (IMF) and the World Bank this weekend, finance ministers from the most industrialised nations met in Washington on Friday. The G7 Finance was to tackle growth and world balance as well as reform of the IMF, capital market developments and exchange rates. The meetings of the international financial and monetary committee and the development committee of the Bretton Woods institutions will open on Saturday to a backdrop of scandal, as the president of the World Bank, Paul Wolfowitz, is placed in the hot seat for nepotism.
“When you look at the world economy, it continues to grow fast”, said Chancellor of the Exchequer Gordon Brown on Friday before the G7 meeting. According to forecasts published on Wednesday 11 April by the IMF, the world economy will slow down but remain healthy. With 4.9% in 2007 and 2008, compared to 5.4% in 2006, the trend is toward “modest deceleration” of world growth. The slowdown of activity in the United States, the main factor for this deceleration, should be neither lasting nor over-contagious. American growth should reach 2.2 this year to rise to 2.8% next year (compared to 3.3% last year). Although in slight decline, growth of the eurozone is expected to exceed American performance in 2007, reaching 2.3% in 2007 and 2008, compared to 2.6% in 2006. In Japan, the rate of expansion is expected to remain at 2.3% in 2007 and 1.9% in 2008, after 2.2% in 2006.
The persisting weakness of the Japanese yen, the under-evaluation of the yuan and the high level of the euro compared to the dollar is not expected, however, to bring a stronger warning from the ministers than during earlier meetings, Mr Brown confirmed. As in Essen (EUROPE 9364), ministers were thus to call for greater exchange flexibility and warn against any sudden movements.
A meeting on a regulatory framework for speculation funds attended by around twenty hedge funds and private equity funds will, moreover, be held on Sunday after the G7. Given the absence of the German finance minister, Peer Steinbrück, although the subject is a favourite hobbyhorse of his, it will be the secretary of state for finance, Thomas Mirow, who will represent the EU Council presidency and the G8 presidency. “A hedge funds regulation approach based on the market worked well, although many more improvements could be made”, said Ben Bernanke, Financial Reserve President, for his part, expressing caution, on Wednesday, regarding a dossier where the desire for regulation seems to have little chance of coming to anything. (ab)