BRICS economies have been key drivers of global recovery: Pranab Mukherjee

Washington, Sep 23 (ANI): Stating that financial markets continue to be in state of uncertainty showing little confidence in the growth prospects and policy actions taken by sovereign governments particularly in advanced markets, Finance Minister Pranab Mukherjee said here on Thursday that BRICS economies have been key drivers of the global recovery, but even their growth is faced with the challenge of inflation and continuing uncertainty in global financial markets.

Addressing the BRICS Finance Ministers Meeting in Washington DC, Mukherjee said : "We are meeting here at the time when global economic growth seems to be losing its momentum after about a year and half of fragile and uneven recovery. There are signs of economic and financial weaknesses in Europe and the US that threaten the global economic outlook. The robust and quick recovery in EMEs also seems to be running out of steam."

"It is important that at this juncture the BRICS countries have come together to discuss the implications and the possible policy responses to the emerging situation in the US and Europe and in doing so make an assessment around the following agenda points: state of the global economy and current risks, policy response in advanced economies and market reaction, BRICS policy response and coordination, BRICS Report," he added.

Mukherjee said the global economic growth seems to be decelerating recently with a downward revision in growth projections of both advanced and Emerging Market economies after about a year and half of fragile, uneven and multi-paced recovery.

"The weaknesses in major developed economies continue to be a drag on global recovery and poses risks for world economic stability. Despite the return to growth, unemployment levels in the United States remains at unacceptably elevated levels. With the near term growth prospects in both the US as well as in the European countries appears to be rather bleak, and according to experts, the chances of a double dip recession cannot be ruled out," said Mukherjee.

"In the euro zone, the indications are that drastic austerity measures might entail a recession without resolving their debt sustainability problem, and possibly also affect the growth prospects of other neighboring European economies. There is also a fear that Euro zone sovereign debt crisis could spread to some larger countries that are too big to be bailed out. The European banking system is also at risk on account of its exposure to peripheral sovereign bonds and cross holdings that make them vulnerable to contagion from assets not directly on their balance sheets," he added.

Mukherjee further said the growth in Japan also remains a source of concern following the after effects of the earthquake and tsunami.

"It is therefore evident that the revival of the global economy following the financial crisis of 2008 has started to falter. Successive numbers on growth, industrial production and forward looking indicators are suggestive of an impending recession in advanced economies. The most serious and immediate problem faced is the debt crisis in several advanced economies with the market perception that public debt of these countries could continue to rise even as growth remains subdued," said Mukherjee. (ANI)