No easy G7 answer for Asias current account riches

  • 02/02/2005

  • Financial Express (New Delhi)

It's not a message that the Group of Seven wants to hear, but the surplus Asian savings that are a crucial part of the imbalances threatening to capsize the world economy are unlikely to shrink much any time soon. G7 finance ministers, who meet in London this weekend, are expected to urge Asia to do its bit to iron out the imbalances by letting the region's tightly-controlled currencies rise. Stronger exchange rates should boost domestic demand and so narrow Asia's current account surplus. At $325 billion in 2004, this was the counterpart of about half the record US deficit, which ran at an annual rate of $660 billion in the third quarter, or about 5.6% of gross domestic product.