G7 ministers to face many hurdles

TOP world finance chiefs have gathered in Singapore to grapple with simmering inflation, slowing US growth, terrorism financing and the lopsided global economy.  

Washington currently faces a threat by Iran to shift some of its reserves out of the dollar.  

China, although not a member of the Group of Seven (G7) industrialised nations, is nonetheless expected to loom large. Ministers and central bankers are likely to press Beijing to further ease controls on the yuan.  

Dangerous imbalances: High on the agenda of the meeting of ministers from Britain, Canada, France, Germany, Italy and Japan and the United States will be what are seen as dangerous imbalances in the global economy.  

While the United States has run up massive current account and budget deficits, large export-led surpluses are building up in Asia.  

Chinese yuan issues: Currency issues could figure prominently in the G7 talks. The United States and some of its partners are dissatisfied with China’s reluctance to allow a more significant appreciation in the yuan to ease trade imbalances.  

The G7 will hold a working lunch with China’s finance minister, Jin Renqing, and its central bank governor, Zhou Xiaochuan.  

Zhou told a seminar on the sidelines of the meeting that China’s foreign exchange policy was clear, adding: “We are gradually moving towards more flexibility with the regime.”  

Lebanon debt burden: French Finance Minister Thierry Breton said ministers would also discuss ways to ease the US$49bil (RM181.3bil) debt burden that Lebanon is carrying after the Israeli-Hezbollah conflict.  

Breton said Lebanon’s debt amounted to 180% of its gross domestic product, “which is unsustainable for the Lebanese economy”.  

World economy robust, but risks loom: The G7 meeting comes just days after the IMF issued a clear warning that the world economy, while robust at present, could begin to flounder next year as US momentum flags. – AFP  

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