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LEAD: G-8 finance ministers preparing to give rosier economic view.

TOKYO, June 9 Kyodo


Group of Eight finance ministers are preparing to give a rosier assessment of the global economy at their two-day meeting over the weekend in Italy, conference sources said Tuesday.

They will most likely note that there are some initial signs of improvement appearing in many major economies, thanks to coordinated policy actions taken so far by governments around the world to fight the worst recession in decades, the sources said.

The prime focus will be on what kind of expressions the G-8 ministers actually use in their joint communique in explaining that the worst part of the recession may be over, when they meet in Lecce in southern Italy from Friday.

''This is very tough work. The G-8 does not want to mislead people by offering messages that are too optimistic,'' one of the sources who is organizing the meeting said. ''But at the same time, we want to be clear that the situation has gotten better over the last several months.''

''So the balance is difficult. I expect that the wording will not be set until the very last minute as this will be the most sensitive part,'' he said.

The meeting will be held at a time when economic figures in many countries are starting to suggest that the pace of slowdown has become moderate, while stock and commodity prices are bouncing back on hopes of a sooner-than-expected recovery later this year.

In Japan, Finance Minister Kaoru Yosano, who will attend the meeting, told reporters earlier this month that he believes the world's second-largest economy hit bottom in the January-March quarter and will likely make a real comeback from the end of this year to spring next year.

Similar views have also been expressed by many other top policymakers in the United States and Europe.

In April, when finance chiefs from the Group of Seven industrial powers -- Britain, Canada, France, Germany, Italy, Japan and the United States -- gathered in Washington, they sounded somewhat optimistic about economic prospects in the near future for the first time in more than six months.

''Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilization are emerging,'' said the statement of the G-7 finance ministers and central bank governors.

The G-8 members, the seven powers plus Russia, are exploring whether to slightly raise their economic assessment from the one released after the Washington meeting on April 24, the sources said.

Nevertheless, there is no doubt that the G-8 countries will caution that the global economy continues to face considerable challenges and downside risks, and that this is no time for complacency.

On Tuesday, Yosano said the paramount importance of the upcoming meeting will be ''establishing a common ground of understanding between members'' on their economic measures.

When asked at a news conference whether the G-8 will declare the global economy has bottomed out, Yosano said, ''At this stage, I can't clearly say that.''

''Each country is expected to explain its economic outlook and stimulus measures that have been taken,'' Yosano said. ''Through such a process, I think the G-8's overall current situation will come out more clearly.''

At the meeting starting with a working dinner on Friday, they are expected also to discuss how far commitments made by leaders of the Group of 20 major developed and emerging economies have progressed in the past months.

One of the pledges at the G-20 meeting in London in early April was to stimulate the global economy through concerted fiscal expansion, amounting to $5 trillion by the end of 2010.

The G-8 ministers may start to exchange views on exit strategies from massive fiscal spending as they acknowledge that ballooning budget deficits and prolonged government intervention in the private sector would hamper healthy economic growth in the long run.

The outcome of the Lecce meeting will serve as important input for discussions at the July 8-10 summit to be held in the central Italian city of L'Aquila.

Also, the results of the meeting could have some influence on the course of the next G-20 financial summit in Pittsburgh in September, which some think will be the last meeting of its kind, following the first in Washington in November in the wake of the global financial crisis.

Other major agenda items at the G-8 finance ministers meeting will be reform of international financial organizations, climate change and development aid, according to Japanese officials.

The ministers may touch on the issue of whether to impose additional financial sanctions on North Korea in response to Pyongyang's recent nuclear test, if ongoing U.N. Security Council negotiations make any tangible progress in the coming days, according to the sources.

But the issue mainly falls under the jurisdiction of foreign ministers, so if they do not reach any consensus on what to do next to quell North Korea's ambitions, finance ministers will most likely be unable to say anything concrete.
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Publication:Japan Policy & Politics
Date:Jun 8, 2009
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