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G-8 leaders call for action to nurture recovery as summit kicks off

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(Globalpost/GlobalPost)

The leaders of the Group of Eight countries called Monday for decisive action to nurture a sustainable recovery as they gathered for a summit in Northern Ireland to discuss ways to spur the world economy.

Japanese Prime Minister Shinzo Abe, resolved to end nearly two decades of deflation and revive Japan's economy, explained his economic policies to fellow leaders and in so doing, made his policies, dubbed "Abenomics," an international commitment.

Meanwhile, Syria, where more than two years of civil war has sparked a humanitarian crisis, dominated the agenda on regional affairs discussed by the leaders of Britain, Canada, France, Germany, Italy, Japan, Russia and the United States the same day.

In a statement issued after discussing the world economy, the G-8 leaders agreed that advanced countries need to balance supporting domestic demand with structural reforms, while implementing "credible fiscal plans."

They also converged on the view that monetary policy should support recovery and be directed at domestic price stability, while agreeing that urgent and specific measures are needed to create "quality jobs" for young people.

On the Japanese economy, the G-8 leaders said Tokyo needs to define a "credible medium-term fiscal plan," while acknowledging that the country's growth is supported by its fiscal stimulus, bold monetary policy and growth strategy, which together make up the "three arrows" under Abe's economic policies.

During the first session, which focused on global economic issues, Abe expressed his determination to spur the nation's economy so that it will benefit world economic growth.

Abe also told his fellow leaders that he aims to integrate the nation's economy into the global economy by helping Japanese firms expand into overseas markets and promoting foreign investment in Japan, a Japanese official said.

Abe made clear his intention to not just raise the sales tax from the current 5 percent to 8 percent next April but also increase it to 10 percent in October 2015 as planned if the economic environment is ready for such a move, according to the official.

He explained Tokyo's goal of reducing the ratio of Japan's public debt to gross domestic product in a stable manner, stressing the importance of balancing fiscal rehabilitation and economic growth.

During the same session, one G-8 leader pointedly expressed concerns about the monetary easing steps implemented by Japan and the United States, asking what their "exit strategies" are and pointing to the danger of the competitive currency devaluation they could set off, the official said, without identifying the speaker.

Later Monday, German Chancellor Angela Merkel met with Japanese Prime Minister Abe and apparently issued warning against Japan's credit-easing policy that led to the yen's sharp depreciation against major currencies earlier this year.

Merkel raised the issue of foreign exchange in the meeting and indicated current circumstances surrounding foreign exchange rates could harm the global competitiveness of cheap labor countries, a Japanese official told reporters.

In the G-8 summit, another leader welcomed Abe's efforts to promote economic growth, the same official said, adding that most of the participants made remarks that echoed the essence of the Abenomics policies.

Meanwhile, three of the leaders who gathered at the Lough Erne golf resort, this year's venue of the annual G-8 summit, pointed to China's large trade surplus as a matter that needs considering, according to the official.

"I received positive evaluations from the leaders of other countries about Japan's economic policy," Abe told reporters after the session, adding that other leaders saw the Japanese economy, which he said is on a recovery track, as positive for the world economy.

G-8 leaders, he said, discussed the need to work on rehabilitating their finances, while at the same time seeking growth and working to reduce unemployment among young people.

Ahead of a session on regional affairs at the G-8 summit, which focused on Syria, Abe told reporters that in the session, he intended to call for an immediate stop to violence in Syria and urge Syrian President Bashar al-Assad to step down.

While he apparently ended up not calling on the president to step down, Abe still pointed out in the session that the Assad regime has its own problems and that extremists should not create chaos, according to the official.

The Japanese leader offered $10 million in fresh emergency aid for Syrian refuges.

In the same session, Abe led discussions on North Korea, which is continuing its nuclear and missile activities in defiance of U.N. Security Council resolutions banning such moves.

During the two-day meeting, the leaders are also expected to address counterterrorism efforts in northern and western Africa following the Algerian hostage standoff in January, tax avoidance by multinational corporations, efforts to resist trade protectionism, and transparency in business transactions before wrapping up with a leaders' declaration on Tuesday.

On the sidelines of the G-8 summit on Monday, Abe met bilaterally with British Prime Minister David Cameron, Canadian Prime Minister Stephen Harper, German Chancellor Angela Merkel, Italian Prime Minister Enrico Letta and Russian President Vladimir Putin.

He does not plan to sit down with U.S. President Barack Obama or French President Francois Hollande for bilateral talks during the summit as Abe recently spoke with Obama by phone and met with Hollande during his trip to Japan, according to Japanese officials.

Also on the fringes, Obama, Cameron and EU leaders declared that the United States and the European Union, which together account for roughly half of the world's economic output, will enter into negotiations for a free trade agreement next month, a move that would create the world's largest free trade zone.

This year's summit is the second G-8 leaders' meeting for Abe, who became prime minister last December for the second time. He attended the 2007 summit in Heiligendamm in Germany when he served as prime minister for a year until September 2007.

==Kyodo

http://www.globalpost.com/dispatch/news/kyodo-news-international/130617/g-8-leaders-call-action-nurture-recovery-summit-kicks