14 Jun 2009

Big economies stabilising, says G8 ministers

9:58 am on 14 June 2009

The world's largest economies are beginning to stabilise but still face major risks amid an ongoing global recession, G8 finance ministers say.

At a meeting in Italy of Group of Eight nations, the ministers said stock markets were rising, interest rates more stable, and consumer confidence was returning.

"The force of the economic storm is receding. There are encouraging signs of stabilisation across many economies," said US Treasury Secretary Timothy Geithner.

However, Mr Geithner led warnings that it was too early to wind down economic stimulus packages.

He said they should remain in place until a global recovery was under way.

The meeting's final joint statement said they had asked the International Monetary Fund to help them analyse possible ways of ending economic stimulus policies.

Pressure has been building in the G8, particularly from fiscally conservative nations such as Germany and Canada, for plans to wind down stimulus as soon as it is no longer needed - "exit strategies" that would prevent market interest rates from climbing high enough to threaten economic recovery.

The communique stressed there would be no immediate end to stimulus, noting unemployment might continue rising even if production began picking up.

Mr Geithner indicated the United States was unlikely to tighten policy any time soon: "It is too early to shift toward policy restraint."

The G8 groups the United States, Germany, Japan, Britain, France, Italy, Canada and Russia.