China's stimulus package timely 'right step'

China's stimulus package timely 'right step' - expert

(Xinhua)
Updated: 2008-11-15 14:12

Washington -- China's recently announced economic stimulus package is "a right step at the right time," Mansoor Dailami, a senior economist at the World Bank, said on the eve of a Group of 20 (G20) summit on financial markets and the world economy.

"China showing the desire to coordinate in terms of stimulating the world economy at this very critical moment is something that should be noted," said Dailami, manager of international finance of the World Bank's Development Prospects Group.

The package "will be considered a right step at the right time, and hopefully, with the right outcome," said Dailami, a 22-year veteran at the World Bank.

Dailami, who is responsible for the monitoring and analysis of the whole spectrum of private and official flows to developing countries, is a well known expert on infrastructure development and finance, emerging bond markets and emerging corporate finance.

"Right Step at Right Time"

"It was announced at the right time," Dailami said of China's 4-trillion-yuan (about $586 billion) stimulus package, which was announced last Sunday, about one week before the G20 summit scheduled for Saturday in Washington.

"In terms of the magnitude obviously it is quite large," he said. "It comes up to close to 15 percent of the GDP this year, but it's going to spread over a number of years, until 2010."

Dailami said the size of the stimulus package as a whole is large enough to help restore confidence.

He said the latest round of financial crisis has dealt a major blow to official and private flows of capital to developing countries.

Private flows into emerging market economies, estimated at $1.1 trillion in 2007, could drop to $800 billion in 2008 and probably $600 billion in 2009, the economist said.

"Singing in Harmony, Singing the Right Song"

Dailami, who earned his master's degree from the London School of Economics and his doctorate in economics from Harvard University, sees "promising and encouraging silver linings" emerging from the current financial crisis.

He said he was heartened by the degree that "the international community is singing in harmony, is singing the right song, and that they are taking every action possible."

"Every crisis has created other opportunities to them," Dailami said. "We need to make sure that every action is taken in a harmonious and coordinated manner, to make sure that the cycles turn upward."

He said the cycles will turn upward, "maybe not in the next year, but definitely by 2010."

Beginning the Process

Dailami said the G20 summit on financial markets and the world economy is obviously the beginning of a process.

He expected that at the summit there will be some discussion in several areas in which different groups of countries are pushing to develop a program of action. "We should at the same time be very realistic," he added.

Dailami noted that the whole institutional framework of global financial markets and global economy under the Bretton Woods systems took a long time before being finalized in the 1940, with discussions starting in 1942 and arrangements sealed in July 1944.