Global economy faces many hurdles
Agence France Presse
Davos, January 30:
Global economic growth must vault hurdles posed by exchange rate imbalances, US deficits and weak growth in Europe, but experts meeting here in Davos ended the week without takeaway solutions. Americans, Europeans, Japanese and Chinese, the latter a major attraction at the World Economic Forum, agreed the situation was risky but not desperate. The dollar’s current level poses major risks for the economies of many other countries, but monetary directors and politicians are unable to calm volatile exchange rates because of divergent interests. Given the stalemate, European Central Bank chief Jean-Claude Trichet could do little but repeat the banker’s mantra that excessive swings in exchange rates were “unwelcome and undesirable”.
The boss of Japanese bosses, Kakutaro Kitashiro, said “we need a stronger dollar” to support Japanese exports, but acknowledged the alternative was “to focus more on domestic demand”. A major subject of conversation among the financial members of the forum — which also included political and social dignitaries in its five-day Swiss Alp fest — was the fixed, some say undervalued, rate of the Chinese yuan against the dollar. Economic voices worldwide have called for Chinese authorities to allow the yuan to rise in value because the monetary peg allows Chinese products to be sold more cheaply around the world.
Beijing envoys, including the influential vice premier Huang Lu, said they were
working on the issue but would not set a date for it as yet.