UNITED NATIONS, May 18: Worried over slow global economic recovery, India has made a case for quick resolution of the sovereign debt problems of Europe to remove uncertainty in financial markets and promote investor confidence.
“Early resolution of the Eurozone crisis would remove much of the uncertainty which currently pervades financial markets and which affects investor sentiment adversely”, he said, while addressing a debate on ‘State of the World Economy and Finance in 2012’ at the UN General Assembly yesterday.
“The Eurozone is projected to experience a mild contraction in the current year with unemployment at very high levels. There are substantial downside risks if confidence is not restored. The US is in a better position but growth is still weak and unemployment, though declining, remains high,” he added.
Ahluwalia further said that fiscal and monetary policies by the US and EU to battle the effects of an economic recession are not showing results and are creating the danger of “policy fatigue”.
“Whatever be the correct balance on this issue, the fact that the policies are not showing results in terms of an early return to growth and a moderation in unemployment creates the danger of policy fatigue. This can lead to extreme turns in both politics and policy,” he said.
On fiscal policy front, he added, there were sharp differences on how to proceed and many distinguished economists have argued that fiscal austerity was actually the wrong medicine in the current circumstances.
Describing the lack of consensus among nations to deal with the global crisis as “disturbing”, Ahluwalia said, bold measures taken by monetary authorities in the US and Europe to counter recessionary tendencies have had some effect, but “serious doubts” persist on whether they can continue these policies.
Given that trade and commerce is the most important lubricant for development, Ahluwalia dubbed as “unfortunate” the languishing negotiations to complete the Doha round for opening of global trade.
He said early conclusion of global trade talks would send a major positive signal to the global community.
“The economic woes we face today cannot be overcome without the major developed countries taking the lead to stimulate economic growth. There is an urgent need for a farsighted leadership which can call for tough decisions while managing popular aspirations,” he added.
Ahluwalia also called for expediting the reform of the international financial to give more voice and representation to the emerging economies. (PTI)
Trending Now
E-Paper
Follow our WhatsApp channel