UPDATE 1-Brazil's Mantega: World at risk of depression

Fri Nov 14, 2008 3:21pm EST
By Pedro Nicolaci da Costa
WASHINGTON, Nov 14 (Reuters) - World leaders meeting to discuss the global financial crisis must come up with concrete, coordinated solutions to prevent a recession from turning into a depression, Brazil's Finance Minister said on Friday.
In particular, the Group of 20 nations should strive for both regulatory reforms and concerted government spending in an effort to revive flagging global growth, Guido Mantega told reporters after a meeting with the prime ministers and finance ministers of Britain, Japan and Australia.
"If we don't take quick action we run the risk of falling into a depression," Mantega said in an impromptu press conference in the lobby of the Four Seasons hotel, where the meetings preceding the official conference were held. "Rekindling confidence requires clear rules, more transparency."
He said expectations from the populations of the various nations were high that some real steps toward ameliorating the crisis would be taken.
Joining Mantega, Brazil's foreign minister Celso Amorim emphasized the importance of pushing forward with the Doha round of international trade talks, saying the world's large economies should be careful not to turn the crisis into an excuse for protectionism.
"Integrating global commerce is like riding a bike -- either you move forward or you fall off," said Amorim.
Amorim said coordinated fiscal action on the part of major economies was a top priority for Brazil, although he declined to give any specifics on how much his government was willing to shell out.
The United States, apart from a controversial $700 billion bailout that has so far failed to stem the turbulence in credit markets, spent $150 billion in an economic stimulus package mostly aimed at middle-income consumers. Congressional leaders have said they will soon try to push another dose of stimulus, perhaps even larger than the first, although the White House remains opposed.
China, for its part, says it has put aside $600 billion, an even larger sum compared to its total output than the United States, for spending measures aimed at reviving its long-standing expansion.
Brazilian officials did not seem to believe the need was as immediate in their country, which is still forecast to grow around 4 percent next year.
"Brazil is not at risk of recession," said Mantega, suggesting this rather benign outlook gave the country more wiggle room than its northern counterparts.
Still, the country has hardly been immune to the crisis, which began with rising U.S. mortgage defaults but has since devolved into the worst financial panic since the Great Depression of the 1930s.
The pain has been felt most acutely in the country's stock market, which has lost over half its values from peaks hit this summer.
Early on in this crisis, many experts had hoped emerging economies would somehow be shielded from the crisis, although a snowball of fear and risk-aversion soon put to rest such expectations for "decoupling." Most risky assets around the world have fallen in tandem, making government bonds one of the few places to hide. (Editing by Andrea Ricci)