Assurances by the world's leading powers that they are moving to stabilise the global economy failed to convince Friday, as markets sank again in impatience for more convincing action. A surprise late-night communiqué from Group of 20 finance ministers and central bankers Thursday recognised the sense of urgency, after a day of intense warnings from leaders around the world, including a number of the elite group's own members.
But it failed to quell worries that the stumbling US economy and the European debt crisis would return the advanced economies to recession and drag down economic growth around the world. After a deep global rout Thursday, markets in Asia sank again Friday, with Hong Kong's market 1.4 percent.
By about 1600 GMT, the main European and US markets had moved into slightly positive territory after sharp opening losses, still wary of giving a vote of confidence to the ability of the leaders of the world's most advanced economies to get ahold of their problems. The G20 officials, in Washington for the World Bank and International Monetary Fund annual meetings, issued a surprise statement after their dinner late Thursday aimed at calming the sense of panic spreading through markets.
"We... are committed to a strong and co-ordinated international response to address the renewed challenges facing the global economy," they said. "We are taking strong actions to maintain financial stability, restore confidence and support growth."
Faced with doubts about the political commitment of leaders in the advanced economies to deal with their weaknesses, the G20 offered specific details about actions being taken: in Europe, how a widening and deepening of the emergency European Financial Stability Facility (EFSF) will take place soon; and in the United States and Japan, plans for deficit and debt reduction. They also vowed "to take all necessary actions" to protect banking systems and financial markets, and that central banks will ensure liquidity when needed.