With the dizzying slide in the dollar apparently checked, the need to restore stability to exchange markets is less urgent than when finance ministers and central bank governors from the world’s richest nations last met in February.
Instead, the task now will be to prevent robust US momentum and rising oil prices from igniting inflationary pressures and to ensure that Europe, where the recovery is sputtering, takes advantage of the rebound elsewhere.
“Now is the time for all the leading economies to make last changes that will help generate stronger global growth and can be sustained well into the future,” US Treasury Secretary John Snow has argued.
Snow denied the US budget deficit – projected at $521 billion this year – was a world menace.
The treasury secretary was clearly keen to deflect criticism of US deficits and to transform it into pressure on other countries to share a bigger burden of global growth when he hosts G7 partners from Britain, Canada, France, Germany, Italy and Japan.
After dining on Friday, G7 powers would hold a formal meeting on Saturday morning, before joining colleagues from the International Monetary Fund and the World Bank for weekend discussions on the international economy.
The IMF, in its semi-annual World Economic Outlook this week, predicted world economic growth would surge from 3.9% last year to 4.6% in 2004 and 4.4% in 2005.
The Fund gave some encouragement to Snow’s agenda, pushing Europe to open up its labor markets, Japan to further reform its banking and corporate sectors, and China to move towards eventually ending its yuan-dollar peg.
But the US also must trim its budget deficit, which had done its work of sparking US and world growth, the IMF said.