Monday, April 20, 2009

Worst of financial crisis is over?

Former U.S. presidential economic adviser: worst of financial crisis is over
Special Report: Boao Forum For Asia 2009

BOAO, Hainan, April 19 (Xinhua) — The worst of the financial crisis is finished, and the world is entering the time when things will get gradually better, John Rutledge, a former U.S. presidential economic advisor, said here Sunday.

He made the remarks during an exclusive interview with Xinhua at the Boao Forum for Asia (BFA) in China’s southern province of Hainan.

The recession in China has already “passed the bottom”, while the recession in the United States is “at the bottom”, he said while describing the current global economic condition.

“The capital markets around the world are recovering very nicely,” he said, adding that the real economy and paycheck have not yet hit the bottom, but “very near bottom”, and will most certainly be improve by the end of the year.

He is more optimistic about the prospect of China’s economy, as he is likely to raise the forecast of China’s economic growth rate in 2009 between 6 percent and 8 percent.

“I think the recent signs suggest the number is too low,” he said, referring to his previous forecast between 5 percent and 6 percent.

In terms of growth, Rutledge thinks China will come back fast, while the United States will revive more slowly.

Rutledge also praised China’s massive stimulus package.

“China has almost entirely aimed at construction and infrastructure. As Wen said, infrastructure will make more productivity later for the economic growth,” he said.

Rutledge pointed out that China’s stimulus package is of great social value, as it is aimed directly at construction in an effort to raise the income of migrant workers.

“They (migrant workers) transfer money they make from rich cities to families in small villages. It’s very important to keep the flow of money to help the less fortunate villages to grow,” he said.

China does not need another stimulus package, as the current one is well-designed, fast, large, and it is aimed at people who “need help most”, he said.

“We can declare victory, I would say,” said Rutledge, noting that the crisis would make integration between Asian countries closer and boost cooperation between governments.

“This is where the stability of the Asian growth machine will be determined,” he said.

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