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World's Bankers Upbeat on U.S. Gains

September 09, 2003|From Reuters

The global economy is improving with U.S. companies poised to resume capital investment, a crucial component in lifting world growth, the world's top central bankers said Monday.

But risks remain for an incipient recovery, with question marks about the sustainability of current strong business and consumer sentiment, while rising fiscal deficits also pose a threat, the chairman of the Group of 10 central bankers said.

"We were very encouraged by developments and the accumulation of signs in the major economies in the world," said Jean-Claude Trichet, who presided over his first meeting of the world's top central bankers and in November takes over the presidency of the European Central Bank.

"We see some perspective for a [U.S.] investment acceleration and that is certainly the element that is most important," he added at a news conference after a bi-monthly central bankers' meeting at the Bank for International Settlements in Basel, Switzerland.

His report was far more upbeat than two months ago when the top central bankers said the global economy was stuck in an uncomfortable rut with no clear evidence of an upswing. Since then, the International Monetary Fund and World Bank both have said they see tentative signs of recovery.

While the U.S. is improving and "things were moving" in the right direction in Japan, the euro zone would probably disappoint this year with growth possibly falling below the 0.7% mid-point that European Central Bank staff forecast, Trichet said.

Risks to the outlook are that consumer and business confidence falters and a pickup in capital investment fails to materialize. Fiscal deficits, with the United States and euro zone running red ink, also pose a threat, Trichet said.

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