Business

Governance to keep recession at bay: Villepin

By Xin Zhiming (China Daily)
Updated: 2010-09-02 15:35

CHANGCHUN - Improved global governance will help nations avoid a double-dip recession, as the pace of economic recovery still remains fragile, Dominique de Villepin, former French prime minister and current chairman of Asia Pacific CEO Association said, on Wednesday.

"Nations are yet to recover from the 2008 financial crisis," Villepin said at the inaugural session of the World Emerging Industries Summit in Changchun, Jilin province.

"We are in the midst of a long slump, that is even more dangerous (than the 2008 crisis)," he said.

The quick stimulus measures adopted by most of the major economies have helped avoid a deep recession, but there are also growing dangers of a double-dip decline.

Inflation in the eurozone slowed in August, but unemployment has nearly risen to a 12-year high in July as more and more companies are cutting costs to bolster their balance sheets.

Consumer prices in the eurozone rose by 1.6 percent in August from a year earlier, after going up by 1.7 percent in July. The jobless rate remained at 10 percent for a fifth consecutive month, the highest since August 1998.

In the United States, the Federal Reserve has warned that the economy could weaken further. The worsening economic indicators have also triggered turbulence in the capital markets.

"After seeming to take root early this year, the 'green shoots' of economic recovery that first sprouted a year ago have suddenly begun to wilt," said a recent report from Nomura Securities.

"Against a backdrop of other signs of slowing activity, the continuing climb in jobless claims over most of August has stoked fears that the recovery might be stalling (in the US)," the report said.

"There are still many uncertainties," said Villepin.

"The US economy still remains weak; unemployment is soaring and not expected to immediately bounce back to robust levels, while the housing market is flagging," he said.

"There are weaknesses elsewhere also. But in Europe, there is a dramatic weakness and predicted growth rates may continue to decline for some more time," Villepin said.

"The economic crisis is also a call for quick changes," he said.

Commending the role of the G20 in improving global governance and coping with the crisis, Villepin said it was a "great step".

"The regular meeting of the G20, a largely representative economic forum of world powers, has been promising, especially in its first year, in Washington and London."

But such progress must be sustained, he said. "Since then (the first year of the G20 mechanism), actually, very little progress has been made on the financial regulation front."

Villepin also called for a change in the development model of the global economies. "Our model of development is at a dead end," he said.

China Daily