The global economy remains strong but close international co-operation is needed to prevent turmoil in credit markets from ending a five-year stretch of strong growth, Belgium said on Saturday in a statement prepared for a meeting of IMF members.
Belgium issued the statement on behalf of Austria, Belarus, the Czech Republic, Hungary, Kazakhstan, Luxembourg, Slovakia, Slovenia and Turkey. Belgian Finance Minister Didier Reynders said recent market turbulence risks slowing global growth and called for greater transparency on financial risk exposure, a prerequisite for preserving liquidity.
Signs of banks' capital being impaired further could "significantly weaken output growth, particularly in countries where enterprises rely heavily on bank credit," Reynders said. A hopeful sign, he added, has come from emerging market countries that have weathered the recent credit market storm even as more advanced economies wobbled.
"It is particularly encouraging to observe that the recent turbulence in advanced countries' financial markets has only so far mildly affected emerging market economies, in sharp contrast with experiences during past decades," he said.
Broad reforms in emerging markets, many of whom have become net creditors and have seen the value of their financial markets soar, have "significantly improved the investment climate."