Crisis is still to reach its bottom, G-8 leaders worry

On Wednesday, G-8 leaders negotiated, concerning the question of coordinating exiting strategies once their countries’ economies are stable. However, the financial data still remains dismal, reflected by rising unemployment, slowing growth and other economic breaches, so most economists think the crisis has yet to reach its nadir.

The leaders of G-8 participants, Britain, Canada, France, Germany, Italy, Japan, Russia and the United States, are to discuss when to start shifting from the current emphasis on fiscal stimulus, but they also are likely to remain cautious in their assessment of recovery so far.

Britain and the United States said they can see room for more stimulus, while Germany worries that it has done too much already. 

Both the United States and Europe reported dismal jobless numbers. Thus, unemployment in the euro zone rose in May to a 10-year high with more than 15 million people unemployed. At the same time, in the USA, the jobless rate reached a 26-year high of 9.5%in June as American employers reduced a larger-than-expected 467,000 jobs. SO, the leaders forecast that unfortunately jobless numbers still could grow. 

Gordon Brown presented its five-point plan that includes increasing bank lending, reducing volatility in oil prices, curbing trade protectionism, boosting private investment and safeguarding the jobs of younger people.

As for the US president, he signed an $787 billion economic stimulus bill in February, but only about 15% of that has made its way into the economy so far, that lead to debate between the wait-and-see camp and economists who urge another stimulus, arguing the recession proved to be deeper and more devastating than originally expected.

As John Kirton of the G-8 Research Group at the University of Toronto stated, none of the three largest economies in the world are ready to move on to exit strategies as the impact of stimulus was still being measured and, so the discussions on possible exit strategies still remain "quite academic” . 

Additionally, the leaders are to discuss climate change and development aid later in the afternoon before taking on security issues, including Iran's crackdown on pro-democracy demonstrators and North Korea's firing of ballistic missiles into the ocean in violation of UN resolutions.