World leaders agreed that the global economy is too unstable to begin rolling back massive fiscal stimulus plans in the near future, according to a draft of the Group of Eight statement on the world economy obtained by The Associated Press.
The leaders, however, are committing to prepare exit strategies from the "unprecedented and concerted action" that has been taken. Germany, worried about running up crippling debt, has pressed for spending restraint, while other major economies like Britain, Japan and the United States can't rule out the need to pump in more money.
"We will take, individually and collectively, the necessary steps to return the global economy to a strong, stable and sustainable growth path," the draft communique said.
The measures include continuing their stimulus packages while keeping inflation under control, a particular German concern, while also ensuring that banks have enough cash to keep lending.
In the meantime, the countries will prepare exit strategies, with the help of the International Monetary Fund, which will vary from country to country as the measures themselves have, the draft said.
The leaders gathered today in the quake-devastated central Italian city of L'Aquila, where they also wrestled over a potential landmark agreement on limiting the global rise in temperature. Over dinner later, they planned to turn their attention to world security issues from Iran to North Korea.
The Italian host, Premier Silvio Berlusconi, welcomed the leaders, many of whom arrived at the summit in electric cars bearing their nation's flag. President Barack Obama strolled into the summit site for the first G8 meeting of his presidency.
The leaders may fall short on reaching a commitment to keep the globe's average temperature rise under 2 degrees Celsius (3.6 degrees Fahrenheit) in a bid to contain global warming. The United States, Japan, Canada and Russia — half of the G-8 — have previously refused to back it, and the White House declined today to comment if it had signed off on a statement citing the temperature threshold.
US backing for the deal would mark an abrupt turnaround from the Bush administration's stand and be a strong gesture to developing nations.
European Commission President Jose Manuel Barroso told reporters that he hoped that the leaders could agree to the specific limit on the rise in temperature.
"We are not yet there where we would like to be but I think things are shaping in the right direction for Copenhagen," Barroso said, referring to the next meeting of a key international summit to replace the Kyoto protocol in December.
The abrupt return home of Chinese President Hu Jintao after ethnic tensions soared in China's western Xingjiang territory could weaken trust-building discussions on making further progress on climate change.
China is among five developing market economies — along with Brazil, India, Mexico and South Africa — who are participating in the summit for the fifth straight year, joining from tomorrow to discuss bringing them on board, aid and development. Also joining are nine African nations and a forum on climate change.
The summit will also discussion ways to widen Group of Eight even further amid growing sentiment that world's most-industrialized nations can no longer claim leadership on the global political and economic agenda.
Obama signed an $787 billion economic stimulus bill in February, but experts say only about 15 per cent of that has made its way into the economy so far — creating a debate between the wait-and-see camp and economists who urge another stimulus, arguing the recession proved to be deeper and more devastating than originally believed.Reuse content