G-8 finance ministers meeting in Japan to face soaring oil prices, other global woes.
Runaway oil prices will be a focus of finance ministers from the Group of Eight industrialized nations meeting this week in Japan who are hoping to calm global jitters about a series of looming economic problems. Soaring crude oil costs and rising food prices have created inflationary risks not seen in years.
Add to that the credit crunch still dragging on global growth and rattling international markets as well as persistent worries about a U.S. economic slump, and finance ministers have a long list of worries to address when they gather Friday for the two-day meeting in Osaka, hosted by a nation that imports nearly all its oil.
Japanese Finance Minister Fukushiro Nukaga recently told reporters he wanted a "serious discussion" of global economic development, environmental changes, African development, crude oil problems and rising food and commodities prices.
Nukaga also expressed concern about Japan's economy, the world's second-biggest, which he acknowledged was in a lull, with business investment and consumer spending stagnant and exports slowing because of a slump in the U.S., a key export market.
"I'm hoping for serious debates about what the G-8 will do, both individually and collectively, to solve those problems," he said about the meeting that will bring together finance ministers from the U.S., Japan, Russia, Germany, France, Britain, Italy and Canada.
The session is one of several ministerial meetings leading up to the G-8 leaders' summit to be held July 7-9 in Hokkaido, the northern island of Japan. Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities Co. in Tokyo, said the finance ministers have many serious problems to tackle but said they can't overreact in regulating financial markets because that could have the opposite effect -- making for jumpy markets.
"They must try to solve the problem in moderation and take a mild, calm approach," he said. Instead of concerted action, they are more apt to exchange views, share their concerns and agree to work together, he said.
Concerns that the American economy -- by far the world's largest -- is sliding into a recession worsened after figures last week showed the jobless rate shot from 5 percent to 5.5 percent in May, the biggest jump in two decades.
U.S. Federal Reserve Chairman Ben Bernanke -- who will not be at the G-8 meeting -- has tried to allay such fears by saying the risk of a "substantial downturn" had waned in recent weeks. The Fed's interest rate cuts, the government's $168 billion stimulus package and progress in fixing the financial and credit market problems are helping prop up the American economy, and solid U.S. exports for the rest of the year should also help, he said.
But Bernanke also said recent energy price gains have raised inflation risks and the Fed "will strongly resist" any erosion in long-term expectations for prices -- raising speculation that the Fed is prepared to raise rates.
Oil spiked to nearly $140 a barrel last week, and several Asian countries, including India, Indonesia and Malaysia, have cut fuel subsidies, raising retail prices for millions of consumers.
Meanwhile, the world is grappling with an emerging food crisis as prices of corn, wheat, rice, soybeans and other agriculture products have been spiraling higher. The gains are due to a mixture of factors including high oil prices, changing diets, urbanization, expanding populations, extreme weather, growth in biofuel production and speculation. The food price hikes have set off riots and protests from Africa to Asia and raised fears about a global food crisis that could cause millions more people to suffer malnutrition.
G-8 finance ministers plan to meet with officials from Australia, Brazil, China, South Korea, South Africa and Thailand to weigh the impact of surging oil and food prices on the global economy, the Ministry of Finance said Thursday. Related to the fears about oil prices are concerns about global warming and other ecological initiatives to boost nations' fuel efficiency and reduce greenhouse gas emissions.
The weakness of the dollar is also likely to be discussed by the finance ministers, although so far this week the dollar has staged a modest recovery, rising above 107 yen. The euro, trading above $1.57 last Friday, has fallen below $1.55.
The dollar's recent gains came after U.S. Treasury Secretary Henry Paulson warned this week that he isn't ruling out intervention to stabilize the currency, as well as Bernanke's suggestion that the Fed is prepared to raise rates to fight inflation.
Dollar weakness has been a contributing factor in oil's surge as some traders invest in oil as a hedge against inflation and a slumping greenback. A declining dollar can also erode the value of exports from Japan and Europe to the U.S. when earnings are repatriated.
Runaway oil prices will be a focus of finance ministers from the Group of Eight industrialized nations meeting this week in Japan who are hoping to calm global jitters about a series of looming economic problems. Soaring crude oil costs and rising food prices have created inflationary risks not seen in years.
Add to that the credit crunch still dragging on global growth and rattling international markets as well as persistent worries about a U.S. economic slump, and finance ministers have a long list of worries to address when they gather Friday for the two-day meeting in Osaka, hosted by a nation that imports nearly all its oil.
Japanese Finance Minister Fukushiro Nukaga recently told reporters he wanted a "serious discussion" of global economic development, environmental changes, African development, crude oil problems and rising food and commodities prices.
Nukaga also expressed concern about Japan's economy, the world's second-biggest, which he acknowledged was in a lull, with business investment and consumer spending stagnant and exports slowing because of a slump in the U.S., a key export market.
"I'm hoping for serious debates about what the G-8 will do, both individually and collectively, to solve those problems," he said about the meeting that will bring together finance ministers from the U.S., Japan, Russia, Germany, France, Britain, Italy and Canada.
The session is one of several ministerial meetings leading up to the G-8 leaders' summit to be held July 7-9 in Hokkaido, the northern island of Japan. Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities Co. in Tokyo, said the finance ministers have many serious problems to tackle but said they can't overreact in regulating financial markets because that could have the opposite effect -- making for jumpy markets.
"They must try to solve the problem in moderation and take a mild, calm approach," he said. Instead of concerted action, they are more apt to exchange views, share their concerns and agree to work together, he said.
Concerns that the American economy -- by far the world's largest -- is sliding into a recession worsened after figures last week showed the jobless rate shot from 5 percent to 5.5 percent in May, the biggest jump in two decades.
U.S. Federal Reserve Chairman Ben Bernanke -- who will not be at the G-8 meeting -- has tried to allay such fears by saying the risk of a "substantial downturn" had waned in recent weeks. The Fed's interest rate cuts, the government's $168 billion stimulus package and progress in fixing the financial and credit market problems are helping prop up the American economy, and solid U.S. exports for the rest of the year should also help, he said.
But Bernanke also said recent energy price gains have raised inflation risks and the Fed "will strongly resist" any erosion in long-term expectations for prices -- raising speculation that the Fed is prepared to raise rates.
Oil spiked to nearly $140 a barrel last week, and several Asian countries, including India, Indonesia and Malaysia, have cut fuel subsidies, raising retail prices for millions of consumers.
Meanwhile, the world is grappling with an emerging food crisis as prices of corn, wheat, rice, soybeans and other agriculture products have been spiraling higher. The gains are due to a mixture of factors including high oil prices, changing diets, urbanization, expanding populations, extreme weather, growth in biofuel production and speculation. The food price hikes have set off riots and protests from Africa to Asia and raised fears about a global food crisis that could cause millions more people to suffer malnutrition.
G-8 finance ministers plan to meet with officials from Australia, Brazil, China, South Korea, South Africa and Thailand to weigh the impact of surging oil and food prices on the global economy, the Ministry of Finance said Thursday. Related to the fears about oil prices are concerns about global warming and other ecological initiatives to boost nations' fuel efficiency and reduce greenhouse gas emissions.
The weakness of the dollar is also likely to be discussed by the finance ministers, although so far this week the dollar has staged a modest recovery, rising above 107 yen. The euro, trading above $1.57 last Friday, has fallen below $1.55.
The dollar's recent gains came after U.S. Treasury Secretary Henry Paulson warned this week that he isn't ruling out intervention to stabilize the currency, as well as Bernanke's suggestion that the Fed is prepared to raise rates to fight inflation.
Dollar weakness has been a contributing factor in oil's surge as some traders invest in oil as a hedge against inflation and a slumping greenback. A declining dollar can also erode the value of exports from Japan and Europe to the U.S. when earnings are repatriated.
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