Mensajepor Mr_Baca » Sab Sep 24, 2011 12:51 pm
DJ UPDATE: Russia's Finance Minister Says World May Face 'Lost Decade' Of Growth
24-Sep-2011
--Global economy may face a "lost decade" of growth, Russia's finance minister says
--Lost decade stems from Europe's sovereign-debt problems and the U.S. economic slowdown, he says
--Recession may be averted, but growth rates will likely be slow for the next five to 10 years, he says
(Adds further comments from Kudrin in the fourth and seventh paragraphs)
By Ira Iosebashvili
Of DOW JONES NEWSWIRES
WASHINGTON--(Dow Jones)--The global economy may face a "lost decade" of growth due to sovereign-debt problems in Europe and an economic slowdown in the U.S., Russian Finance Minister Alexei Kudrin said Friday.
"The last few days have shown that the risks that we face are very real," Kudrin told journalists at a briefing on the sidelines of the International Monetary Fund and World Bank meeting.
"During the peak of the last crisis, [European Central Bank President Jean Claude] Trichet said we were faced with a very sobering decade. Now we can add that we are probably facing a lost decade," Kudrin said.
While a recession may still be averted, growth rates will likely be slow for the next five to 10 years, Kudrin said.
Kudrin's words echoed those of IMF head Christine Lagarde, who earlier in the day described a global economy "propelled by a negative feedback loop" that involves weak growth, weak balance sheets for nations, banks and households.
The Group of 20 leading industrial and developing nations released a surprise statement late Thursday, following a broad market selloff, pledging "strong and coordinated" action to stabilize the global financial system. The document, however, stopped short of providing any concrete measures did little to ease the crisis of confidence in world markets.
Cash strapped Greece is "not capable of servicing its debt" and the aid the country has received has not been enough to keep its gross domestic product from falling sharply, Kudrin said. "Now the question lies in preventing a Greek default."
Kudrin said that concerns over the future of the global economy are greater now than during the nadir of the crisis in 2008, even though the initial wave of global instability may have been more powerful.
"In 2008, we did not fully understand the scope of this crisis. In Russia, for example, we were still predicting the economy would grow 2% in 2009, even after the markets had crashed," Kudrin said. "Today we have a clearer vision of the various zones of risks we are faced with, so concerns are probably greater."
The Federal Reserve's plan to reshuffle its bond portfolio in an effort to reduce long-term interest rates--dubbed "Operation Twist" by the markets--would only provide temporary relief at best to the U.S. economy, Kudrin said.
"This gives some opportunities, but cannot cardinally change the situation," Kudrin said.
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