ECONOMY

Few worries for global economy

Estimates of economic growth rates and reductions in inflation in the strong industrial economies continue to be positive, while prospects in emerging economies are also upbeat, a top international financial event heard in Athens yesterday, Speaking at a press briefing at the launch of the spring meeting of the Institute of International Finance (IIF), its president, Josef Ackermann – also chief executive of Deutsche Bank, said that risks are nevertheless still present, linked with geopolitical matters and uncertainties in major economies such as the US and China. But the risks and uncertainties for investors and borrowers also arise from issues related to risk management in the financial sector, Ackermann said. «As liquidity increases in international markets, we are seeing phenomena of relaxation in the domains of lending criteria and of investment in certain markets,» he said. Ackermann said Greece was reaping significant benefits from its membership of the European Union, particularly evident in the form of high economic growth rates, lower inflation and a substantial reduction in fiscal deficits. The IFF congress is being attended by hundreds of top officials and representatives of the world’s strongest financial institutions, central banks and international organizations. More addresses are scheduled today and tomorrow from officials of Citigroup, ING, Merrill Lynch, UBS, Goldman Sachs, the Bank of England and the European Central Bank, among others. Prime Minister Costas Karamanlis will speak at the official dinner this evening, while Economy Minister Giorgos Alogoskoufis is due to address the conference tomorrow. The IIF has more than 350 members from some 70 countries and focuses on issues of emerging markets and good practices in risk management and institutional frameworks for investment. Speaking on the sidelines of the congress yesterday, Serbia’s central bank governor, Radovan Jelasic, said his country will abolish its daily, mandatory foreign exchange rate fixing sessions next week as part of efforts to liberalize its currency market. The central bank will leave the process to the markets from Monday and will only conduct FX fixing sessions on the Serbian dinar «if and when needed,» he told Reuters in an interview. «We are confident that we should continue, even speed up the liberalization of the foreign exchange market because the role of the central bank is not to play the game, but to supervise the game,» he said. The reduced level of central bank intervention in the last few months reflects progress made on this front and the central bank’s satisfaction with foreign exchange market developments, he said. Jelasic also said Serbia will proceed cautiously with future interest rate cuts, the pace of which will be determined by the government’s budget plans and the foreign exchange rate. Bulgaria Addressing the congress, Bulgaria’s deputy central bank governor, Dimitar Kostov, said his country was aware of difficulties in bringing inflation down to meet criteria for adopting the euro but this would be achievable. «Bulgaria as a new (EU) member has an obligation to join the eurozone. The fact is that there is clear understanding not only of the benefits but also the efforts entailed by such a task. At present we are aware of difficulties relating to inflation criteria,» Kostov said. «Yet we think this is an achievable task, which means policy structures can be addressed,» he told a meeting of the Institute of International Finance. (Kathimerini, Reuters)

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