Traverse City Record-Eagle

October 11, 2012

Finance faces global threats


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---- — WASHINGTON (AP) — When global finance ministers meet this week in Tokyo, they'll confront a triple challenge: Economic troubles in three major regions are threatening the world's economy.

And political conflicts are complicating the problem.

Europe is gripped by a debt crisis and stalled growth. A budget standoff in the United States is set to trigger tax increases and spending cuts and perhaps a recession. A weaker Asia is slowing worldwide growth.

Mindful of those threats, the International Monetary Fund has turned gloomier about the global economy. And it's warning that even its dimmer outlook might prove too optimistic if Europe and the United States fail to resolve their crises.

Developed countries are facing a heightened risk of recession, and their troubles threaten China and other emerging economies, the IMF said in its updated World Economic Outlook.

No major solutions are expected to emerge from the Tokyo talks, which begin today when finance ministers and central bank presidents from the seven wealthiest countries meet. They'll be followed Friday by the start of annual meetings of the 188-nation IMF and its sister lending group, the World Bank.

The leaders are expected to downplay any disagreements to avoid jolting financial markets. But they're also likely to warn nations that action is urgently needed to avoid a global disaster.

Their focus will be on Europe, whose financial crisis is entering its fourth year. It poses the gravest risk. European leaders have taken steps to defuse the panic over high government debts and weak banks. Even so, their economies are ailing. Six countries are in recession.