Conclusions of worldwide meetings
It is possible to expect the process of further weakening of the world economy. Such a conclusion was made by the high-ranking representatives of G7 countries during the meeting in Washington. The credit crisis was linked with the worsening of the situation in the real estate market in the USA and affected all over the world, bringing harms to economic growth.
The most optimistic forecast for the near future is explained through delaying volatility in the financial markets. The economic situation in the G7 countries is continuing to become complicated and it affects the developing countries. Earlier the International Monetary Fund made forecasts which stated that in 2008 the U.S. economy will appear in the situation of moderate recession, and the credit crisis may bring losses of $1trln.
The meeting of G-7 Finance Ministers and Central Bank Governors took place last week, which devised a 100 days plan for fighting against crisis in the financial markets of the world. According to the plan, the financial companies should describe the most risky investments in their half year reports, assess their assets and attract necessary amount of investments to avoid crash. The G7 statement says that the rates of economic development in the world may further slow down due to the growing financial crisis.
In addition, During the meeting, the G-7 Finance Ministers and Central Bank Governors expressed concerns with the weakening of the USD rate. "Since the last G7meeting, instability has been recorded in many currencies and we are concerned by its consequences for the economic and financial stability," This statement was made as a result of the meeting.
Since the beginning of 2008 the USD decreased by 7.8% in relevant to EUR. Before meeting of the G7 in Washington last week, the European currency reached historical maximum at $1.5915.
"Since the last G7meeting, instability has been recorded in many currencies and we are concerned by its consequences for the economic and financial stability," This statement was made as a result of the meeting.
"We remain positive about the long-term resilience of our economies, but near-term global economic prospects have weakened," the statement says.
"The current financial market turmoil also has raised broad policy issues about the appropriate regulatory frameworks of our financial sectors. We have reaffirmed the importance of reviewing regulatory frameworks to consider whether changes are necessary to ensure that our financial systems are as efficient and stable as possible in the future," the statement says.
According to the G7 Finance Ministers, the key factor which currently shakes the world economy is the sharp increase of prices for foodstuffs.
The G7 Finance Ministers said that over the recent period, several regions in African and Asia became more instable, and several countries of the Pacific Ocean and Caribbean basin heave already asked the UNO to provide foods to prevent hunger disorders.
The meeting decided to bring general regulation of flows of foodstuffs in the world in order to avoid further hunger disorders in the countries of the third world. In general, over the recent period, many countries became dependent on the humanitarian mission of the United Nations Organization and other organizations. Because of ecological problems and over-population, they can not themselves provide population with food products, and several criminal regimes begin speculating their control on the canals of foodstuff supply.
The UN Food and Agriculture Organization is concerned by the sharp growth of the prices for bread, rice, corn, milk, vegetable oil and other key foodstuffs. The experts of the organization forecast that the expenses of the poor countries on the grain import this year will increase by 56% as compared to the last year.
They say that the price increase for the foodstuffs and energy resources, as well as conflicts and elemental calamities brought to the issue that today 37 countries of the world faced food crisis and need urgent food contribution. Those countries also include Tajikistan and Moldova.
The world prices for wheat increased by 181% over the recent 36 months as of February 2008.
The Head of the FAO highlighted intentions to hold a special meeting at high level in June in Roma to discuss the problem of lack of grain. In 2007 the world reserves of grain, especially wheat, reached the lowest level over the recent 25 years.
"Inflation, especially price increase for foodstuffs may lead to future conflicts. The price increase for the foodstuffs may entail terrible results especially in Africa. If we want to avoid these consequences, we should more seriously accept these problems," said IMF Managing Director, Dominique Strauss-Kahn.