Global economic growth 'robust', says ECB

Global economic growth is “robust” but inflation risks remain as markets absorb the impact of the United States subprime crisis and higher food prices, European Central Bank (ECB) chief Jean-Claude Trichet said on Monday.

“Food is a very big problem” stoking inflationary pressures, along with higher energy costs, stock-market corrections and the risks of protectionist trade policies, Trichet said in his role as spokesperson for the G10 group of central bankers meeting in Switzerland.

He also said that “we have to look very carefully at the business model of banks” in the wake of the billions of dollars in losses incurred by some of the world’s leading financial institutions due to their exposure to the high-risk US mortgage sector.

Despite the downside risks, “at the global level we see confirmation that growth is continuing at a pace that is quite robust”, he said.

The ECB head added that coordinated actions by central banks such as his own, the US Federal Reserve, the Swiss National Bank and the Bank of Japan to inject much-needed liquidity into the financial markets had been “efficient”.

He stressed that the booming economies of developing nations such as China and India have proved thus far resilient in the face of the subprime crisis.

“The emerging world is not touched,” he said.

“Emerging markets have very impressive dynamics. There is no evidence that there is significant influence from the market correction, which has been observed in the industrial world,” Trichet said.—AFP