Emerging economies get new role

The G20 group of leading and emerging economies is to take on a new role as a permanent body co-ordinating the world economy, a White House statement said.

It will take on the role previously carried out by the developed powerhouses of the G8 group.
The G20 is meeting in the US city of Pittsburgh for a two-day summit.
EU officials also announced a deal to shift the balance of voting in the International Monetary Fund (IMF) towards growing nations such as China.
Currently, China wields 3.7% of IMF votes compared with France's 4.9%, although the Chinese economy is now 50% larger than that of France.
Robert Peston said that the rich nations of North America and Europe formally acknowledging that they no longer have a monopoly of wisdom on what's good for the global economy would be the most important thing to come out of this summit.

Source BBC

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Forecasts for Asian growth raised

The economies of China and India are set to grow by more than previously thought in 2009, the Asian Development Bank (ADB) has said.

Government spending in developing Asian economies had enhanced the region's growth prospects, it said.
It now expects China to grow by 8.2% in 2009, up from an earlier forecast of 7%. India's forecast has been raised to 6% from 5%.
But it also warned governments not to withdraw stimulus policies too soon.
"Expansionary fiscal and monetary policies have softened the blow of the global slump on the economy," the ADB said in its updated annual outlook.
"A surge in bank lending and vigorous fixed-asset investment has maintained growth at a higher pace than was expected in March."
But it added: "This is not the time for an exit from expansionary policies - the recovery remains fragile and subject to serious downside risks."
The ADB raised its growth forecasts for the region to 3.9% in 2009, from its previous forecast of 3.4%. It also raised its 2010 forecasts to 6.4% from its previous estimate of 6%.

Source BBC

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U.S. household wealth up for first time since 2007

WASHINGTON - U.S. households' net worth rose by $2 trillion to $53.1 trillion in the second quarter, the first increase since before the recession began in 2007, Federal Reserve data showed on Thursday 17.

The increase in wealth came in a period that saw the first rise in household real estate assets since the fourth quarter of 2006, and huge gains in global financial markets.
However, even with the $2 trillion rise, household net worth was still well below the $65.3 trillion peak recorded in the third quarter of 2007, which was shortly before the start of the recession in December 2007.
That steep drop in wealth has put a damper on consumer spending, which normally accounts for about 70 percent of U.S. economic activity, and has encouraged households to boost savings.
In a sign that savings were on the rise, household ownership of U.S. Treasury securities rose to $605.9 billion in the second quarter from $576.4 billion in the prior period. The latest figure is up about 65 percent from a year earlier, and is the highest since the first quarter of 2006, the Fed said.
The quarterly Flow of Funds report also showed households and nonfinancial businesses pared debt, while the federal government piled more on as it stepped up recession-fighting efforts.
Household debt contracted at a 1-3/4 percent annual rate in the second quarter, the fourth consecutive quarter of declines, reflecting drops in both mortgage debt and consumer credit such as credit cards.
Nonfinancial business debt also contracted at a 1-3/4 percent annual rate, the largest quarterly drop since 1993, according to the Fed. The decline was concentrated in commercial paper, loans, and commercial mortgage borrowing.
The federal government's debt increased at a 28-1/4 percent annual rate in the second quarter. The Obama administration has forecast a record $1.6 trillion budget gap for this fiscal year.

Source Reuters

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