LONDON - THE world cannot be complacent about economic recovery and will need to keep emergency stimulus packages in place well into next year, British Prime Minister Gordon Brown said on Saturday.
Addressing G20 finance ministers and central bankers meeting in London, he noted the improvement in the outlook since the height of the banking crisis last year but said more work was needed to ensure an enduring recovery from the worst recession since World War Two.
'The stakes are simply too high to get these judgments wrong, so to decide now that it is time to start withdrawing and reversing the exceptional measures we have taken would, in my judgement, be a serious mistake,' he said.
'With more than half of the total five trillion (dollar) fiscal expansion yet to start, I believe the prudent course is for G20 countries to deliver these fiscal plans and the stimulus packages that have been put in place and make sure that they are implemented in full both this year and the next.'
While policymakers appear agreed that economic life-support packages need to remain in place, divisions have appeared over the best way to fix the banking system and ensure no repeat of the credit crisis that plunged the world into recession.
The International Monetary Fund now forecasts the world economy to shrink 1.3 percent in 2009, a shade less than its April forecast of a 1.4 per cent contraction, and grow 2.9 per cent in 2010, revised up from 2.5 per cent previously.
Policymakers remain cautious about declaring victory when unemployment is expected to go on rising and the financial system remains fragile after a two-year crisis that toppled some of the world's best known banks.
BANKING DIVISIONS
Mr Brown said the G20 group of leading and emerging nations had to think not only about the immediate future but also about how to make the world economy safer for the long-term.
'Making the recovery sustainable does mean, in my view, avoiding unsustainable imbalances between countries,' he said.
'It makes sense for countries with large current account deficits to boost exports. It makes sense also for countries with large current account surpluses to increase the demand for goods and services from other countries.' -- REUTERS
