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Euro zone crisis will adversely impact global economies: Manmohan Singh | Prime Minister Manmohan Singh has said that it is important for all countries in G20 group to cope up with problems
arising from the Euro zone crisis and help unstable economies in a bid to instill confidence in global markets. Addressing G20 leaders here, Singh noted that the
Euro zone crisis is extensively affecting global markets, resulting in loss of
its confidence. "Until recently, the robust growth in the emerging markets was
seen as a stabilizing force in the evolving global economy. The Euro zone crisis
and the faltering global recovery together are now having a very adverse impact
on market confidence and on the pace of growth in our economies," said Singh.
He stressed on the need for collective effort to deal with clouds of skepticism
hovering over effectiveness of the G20 member countries. "A strong message, I
suggest should come from the summit of our collective resolve to tackle these
problems head on. There seems to be growing skepticism regarding the effectiveness
the group of 20 (G-20) and we have to counter this growing impression," said Singh.
Singh informed that problems of sovereign debt and bank re-capitalisation are
a result of Euro zone crisis and need to be solved with immediacy. "The first
task is to ensure the stability of the Euro zone, which is now under threat because
of imbalances that have been allowed to build up and which have led to serious
problems of sovereign debt and bank re-capitalization. The statements made by
the newly elected Greek leadership are encouraging but the danger of contagion
remains because it derives from the banking sectors trust associated with high
sovereign debt. Much of the solution to this problem lies within the Euro zone,"
he said. Greece 's election were seen as a determining point whether the country
stays in the single currency bloc and raise fears of a further disintegration
of the euro zone. Leaders from the 20 industrialized and developing nations, representing
more than 80 percent of world economic output, are expected to deliver pledges
to stimulate growth while balancing those efforts against steps to rein in budget
deficits at the Los Cabos meeting. The Group of 20 was created in 1999 to bring
together financial policymakers from traditional economic powers and from fast-growing
developing economies such as China and Brazil . When the global financial crisis
threatened to plunge the world economy into a meltdown, it became a forum for
world leaders to agree on measures such as extra spending to stimulate their economies
and emergency rescue funding for countries unable to fund themselves in debt markets.
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