LECCE, Italy–Germany and Canada appealed on Friday for finance ministers from rich nations to discuss unwinding drastic steps taken to rescue the global economy, given initial signs a recovery may be on the way.
A leap in long-term government bond yields over the past several weeks shows financial markets fear the huge sums of public money pumped into economies will eventually fuel high inflation and damage governments’ finances for years to come.
So pressure is building within the Group of Eight nations for talks on ways to wind down the stimulus programs – “exit strategies” that would reassure investors and prevent bond yields from rising so high that they threaten economic recovery.
“It’s time to have a discussion on how to disengage from the fiscal stimulus. It’s realistic to start talking about the exit strategy,” Finance Minister Jim Flaherty said after arriving at the a meeting of Group of Eight finance ministers in the southern Italian town of Lecce.
Forecasts prepared for the meeting by the International Monetary Fund offered more hope that the global economy will start to recover soon; the IMF raised its prediction for global growth next year to 2.4 per cent from 1.9 per cent, a G8 source said.
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It’s about time. I’m so sick of the Conservative’s foray into Keynesian econo-quackery…