London, 16 September 1998 (RFE/RL) -- British Chancellor of the Exchequer (finance minister) Gordon Brown, whose country holds the G7 presidency, arrived in Tokyo today for the first in a series of consultations on how to restore confidence to world markets.
He'll meet with his Japanese counterpart to discuss how to boost
growth in Japan, the world's second largest economy, whose economy is
expected to shrink by 1.5 percent this year.
Brown will also have talks over the next two weeks with finance
ministers of the other Group of Seven leading industrial countries --
Canada, France, Germany, Italy and the U.S.
Their main concern is how to end the turmoil on stock and currency
markets caused by a contraction of growth in Asia, the ruble devaluation in Russia, and instability in Latin America.
President Bill Clinton warned two days ago that the global economy is confronted with its biggest financial challenge in half a century, and that the industrial countries plainly need to restore growth.
Brown told a news conference in London yesterday that, with inflation low or falling in many parts of the world, the "balance of risks in the world economy has shifted" away from growth.
His remark echoed a statement from the G7 meeting which set off
speculation that the leading industrial powers may take joint action to cut interest rates to head off the risk of global recession.
This would mark a change from the emphasis on fighting inflation.
Brown said his present talks are a prelude for a meeting of G7 finance ministers and bank governors in Washington on October 3 on the eve of the annual meetings of the IMF and World Bank.
"There is a process at work looking at some of the medium and
long-term changes that would need to be made as a result of our review of the international situation. "
He said he will set out some of the conclusions of his G7 counterparts in a major speech to Japanese bankers tomorrow.
Brown also said the IMF and World Bank meetings will be very
important as finance ministers gathered in Washington are likely to draw lessons from what has happened in Asia and Russia.
"There will be a new assessment of prospects for world economic
growth when we come to the IMF meeting in October."
Brown pointed out that the G7 said the leading industrial powers are ready to support the new Russian government of Yevgeny Primakov if it implements its reform program aimed at getting over the ruble crisis. He noted that a mission from the IMF is currently visiting Moscow.
Brown said the global economic picture is a mixed one. He said the
contraction of growth in Asia has been on an unprecedented scale, falling four percent in South Korea over the past year, eight percent in Thailand, and 15 percent in Indonesia. Russia, too, is suffering decline of more than four percent.
But Brown said the U.S. economy is still growing by three percent and the EU countries by two and a half percent.
In Tokyo, he will discuss the need for a strengthening of its financial system, a resolution of its "bad loans" crisis, and for more transparency in financial transactions.
His message will be that Japan, responsible for 60 percent of Asia's GDP, and a "locomotive" for economic growth across the region, has a key role in helping to end regional turmoil, and contributing to a revival of confidence across the world.