Newspaper article The Christian Science Monitor

On Today's Menu: Dark Economic News - Hold the Garlic ; SUBJECT: Lunch Today at the Economic Summit in Genoa, Italy

Newspaper article The Christian Science Monitor

On Today's Menu: Dark Economic News - Hold the Garlic ; SUBJECT: Lunch Today at the Economic Summit in Genoa, Italy

Article excerpt

Mr. President, we know you love Italian food, but you may have to eat quickly - this is a working lunch to discuss the world economy.

Although it's important to stress the positive - look at how good things appeared in England when you were there yesterday - there is a lot of pressure to address the weakening world outlook.

Private economists are now forecasting that there will be some kind of "synchronized slowdown" in the US, Europe, Asia and Latin America. It's still too early to call it a global recession - Merrill Lynch, for example, just calls it a "slump," but, there are clearly some people who are really worried.

For example, this meeting can definitely help Japanese Prime Minister Junichiro Koizumi. Japan's economy is a real mess. For the past decade, it has had virtually no growth and now may be in a recession. Mr. Koizumi is going to tell you about his plans to restructure the economy.

He has already pledged to reduce government spending on bridges, dams and roads. However, construction represents 1 out of every 10 jobs in his country, so any cutback may mean that unemployment - now at 4.8 percent - will rise. And he's pressing the banks to write off their worst loans, which may also make the situation worse before it gets better. As one commentator noted, he would benefit from having the summit endorse his reforms.

As you look across the table, Germany's chancellor, Gerhard Schroder, won't be all smiles either. The German economy is rapidly weakening, and he blames us for slowing down his export-oriented companies. Exports make up 30 percent of the German economy, and one-tenth of that goes to the US. So, the US is only responsible for 3 percent of his gross domestic product.

But German unemployment is rising - electronics giant Siemens recently announced it was laying off a bunch of people in its computer operations. A new round of layoffs could push unemployment close to 10 percent by the end of the year. You might ask Mr. Schroder about labor-market reforms and other structural changes. But he's already ruled those out. Instead, he's counting on a tax- cut package and pension reform to stimulate growth. …

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