Finance ministers from the United States, Japan and four major European countries meet Saturday in Washington to coordinate economic policies to combat an accelerating global slowdown. The meeting will also focus on uprooting the financial links of terrorist networks.
The head of the International Monetary Fund says a synchronized global slowdown requires a coordinated global response. Horst Koehler told IMF executive directors that the Group of Seven meeting is an opportunity to closely align the recovery strategies of Europe, Japan and North America. Mr. Koehler will take part in the G-7 talks.
Treasury Secretary Paul O'Neill tells reporters that global economic fundamentals are positive and that there are tentative signs of a return of more normal business activity. He said he expects U.S. unemployment to continue to rise and the economy to contract in the current fourth quarter of this year. He is optimistic about a recovery in 2002.
The Group of Seven meeting had been planned to coincide with the annual meeting of the IMF and World Bank last month. That gathering was canceled due to the September 11 terrorist attack on America.
David Hale, chief global economist with the Zurich Group in Chicago, says the attack is likely to trigger a very sharp U.S. economic decline this quarter. But that it could be followed by an equally strong rebound early next year. Mr. Hale sees little prospect for recovery in Japan but is optimistic about Europe now that the European Central Bank has cut interest rates. He says the U.S. budget is likely to be in heavy deficit because of emergency spending, economic slowdown, and steadily rising military spending.
The G-7 meeting also brings together the top central bankers from the major financial powers: the United States, Japan, Canada, Germany, France, Britain, and Italy.
On terrorism, the meeting will seek much closer cooperation in addressing money laundering the deposit into banks of money used with criminal intent.