Financial Times - April 26 1999
Camdessus says crisis 'seems to be over'
By Gerard Baker and Robert Chote in Washington The financial crisis that hit most of the world's emerging market economies and prompted the leading industrial countries into emergency interest rate cuts over the past year "seems to be over", Michel Camdessus, the managing director of the International Monetary Fund, said yesterday.
The painful social consequences of the crisis in many countries would take a while to be resolved, Mr Camdessus cautioned. But his remarks before this week's IMF spring meetings reflected a growing optimism among international economic policymakers that the worst of the turmoil is now behind them.
That cautious optimism is expected to be echoed by finance ministers and central bank governors of the Group of Seven leading industrialised countries when they meet in Washington today. Officials said the G7 policymakers would continue to urge countries to pursue policies aimed at sustainable growth, but they acknowledged that the economic backdrop to the meeting was better than it had been at any time in the past year.
"This is the first time for several meetings that things clearly look better than they did three months ago," said a G7 official.
The general tone of today's meeting seems likely to be a combination of modest satisfaction that the world has regained a measure of stability, and a strong desire to press ahead quickly with reforms to the global financial system to prevent a repeat of the events of the past year.
The meeting is likely to be notable for the absence of many of the pointed disputes among the G7 about domestic policies. Japan, often the object of fierce criticism by the US for its failure do more to stimulate its economy, has met most of those objections in the last six months with radical financial reform, a fiscal stimulus and interest rate cuts.
The heat has also been taken out of similar criticism of the European economies since the European Central Bank cut interest rates by an unexpectedly deep half-percentage-point last month.
If the financial crisis is genuinely over, there may be some concern about the appropriateness of monetary policy in some countries, notably the US. Last autumn, the G7 officials said the "balance of risks in the global economy had shifted" away from inflation towards a global slowdown. Immediately afterwards, the US cut interest rates by three quarters of a percentage point.