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Friday, Feb. 13, 2009

Cure-all to elude G7 meet

Staff writer

Gathering for the first time since U.S. President Barack Obama took office in January, finance ministers and central bank governors of the Group of Seven industrialized economies meeting in Rome Friday are expected to focus on the new administration's proposals for dealing with the global financial crisis.

News photo
Outspoken: Finance Minister Shoichi Nakagawa speaks to reporters last December. KYODO PHOTO

But expectations are low among economists that any effective measures will emerge to reverse the worldwide economic slump.

"It is not a problem that the G7 alone can do something about and immediately resolve," said Hiroshi Hanada, economist at Osaka-based Sumitomo Trust & Banking Co.

Gauging the vastness of the predicament as beyond what any country or group of countries can cope with, Hanada said there is little chance that markets will rebound based on any statement issued by the gathering.

A senior Finance Ministry official pointed out that the meeting is being held even as the turmoil has spread to the real economy, which has prompted some observers to declare the emergence of a "negative spiral."

Nonetheless, the official stressed that financial chiefs will discuss countermeasures and try to agree on swift steps to repair the economic damage.

Topics will include the outlook for the world economy, financial markets, international financial institution reforms, food crises, development and climate change, the official said.

Finance Minister Shoichi Nakagawa and Bank of Japan Gov. Masaaki Shirakawa will attend the two-day gathering along with representatives of Britain, Canada, France, Germany, Italy and the U.S.

Nakagawa has indicated he also wants to discuss a proposed "Buy American" provision included in a U.S. economic stimulus bill.

"I would like to frankly exchange views especially on the U.S. situation, including the status of the Buy American stipulation," Nakagawa told reporters Tuesday.

The latest provision would reportedly limit use of steel, iron or other manufactured goods for infrastructure projects funded by the stimulus package to products made in the U.S.

Hideki Hayashi, chief economist at Shinko Securities Co., noted this G7 meeting is particularly important because it is the first to include the new U.S. administration.

The gathering must also address the concerns arising over the declining values of the euro and the pound, he said.

Hayashi expressed the hope that participating countries will pledge more fiscal stimulus measures to keep their domestic economies propped up.

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The Japan Times

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