The global economy is recovering faster than expected, the world's leading central bankers said Monday, though they see dangers from inflation and rising food prices in emerging markets.
The recovery is particularly strong in emerging economies such as China, Brazil and India, according to the group of central bankers that meets in Basel, Switzerland every other month to assess the world economy.
"At the level of the global economy, the recovery would be confirmed in the eyes of the global economy meeting, growth is there and particularly I'd have to say impressive in the emerging economies. But it's confirmed at the global level," said Jean-Claude Trichet, the group's chairman and chief of the European Central Bank, at a press conference.
The group includes Federal Reserve Chairman Ben S. Bernanke and his Chinese counterpart, central bank chief Zhou Xiaochuan. Europe has generally been lagging other regions due to market concerns about its heavy debt loads and gloomy growth outlook.
Trichet said the group agreed to "closely monitor" global capital flows that can bring instability for emerging economies, but found the buoyancy of emerging markets to be particularly impressive where inflationary pressures are contained.
"Since the start of the recovery, we were observing results in terms of facts and figures, in terms of real economic evolution, that were better than forecast. I would say that it's also the case until now in the euro area," he said, noting that he was not speaking about any particular nation.
He said the central bankers did not talk about specific ways to improve the regulation of capital flows. "In emerging countries, we have the information that there are short-term inflows of capital. This is explainable due to strong growth, but sometimes it is a matter for concern," Trichet said.
The group was concerned that record food prices could continue to spiral upward, posing a threat to the recovery, if crops suffer from bad weather.
"There is a unity of purpose at the level of the global economy meeting, which is that we have to deliver price stability and need to be credible in this delivery," he added. "The reasons that are behind the food price increases were considered important. That's something that's particularly important in terms of impact on CPI in the emerging world. It's an element of the possible threat to inflation."
The meeting of central bank governors chaired by Trichet is held on the sidelines of closed meetings by the Basel-based Bank for International Settlements. None of the other participants attended the press conference.
"I see the inflationary threats present as some kind of general feature in the emerging world and that is something that you don't see in the advanced economies," Trichet said after chairing the Global Economy Meeting. "That's always a lesson from the global economy meeting, this is no time for complacency and the solid anchoring of inflation expectations is considered by all of us as something that's important."
The International Monetary Fund also has described the outlook for the world economy as promising this year, though it is at risk from the sovereign debt crises unfolding in the euro zone from Greece to Ireland and continued high unemployment in the U.S. and other developed nations. Trichet said Europe's debt crisis, the Group of 20 nations' agenda and the problems of specific nations like Portugal were not discussed.
"An element that was considered as important was the issue of labor market functioning," Trichet said. "We noted once more a big difference ... as regards job creation, jobs diminishing in a time of the real economy trending down."
- European Central Bank
- Zhou Xiaochuan
- Jean-Claude Trichet
- emerging markets
- Federal Reserve Chairman
- central bank chief