Developing and emerging countries warned Thursday that drastic spending cuts in debt-saddled rich nations threatened to create another "downward spiral" in the global economy. Finance ministers from the Group of 24 (G24), a bloc of developing countries, also pushed back in an escalating dispute over exchange rates with the United States and Europe, dpa reported. The G24 blamed record low interest rates in wealthy countries for causing an unhealthy flood of capital into emerging countries, which in turn was "putting upward pressures on exchange rates" and "creating overheating pressures." The rhetoric reflects in part the unevenness in the world's recovery from last year's deep recession. Emerging powers such as China, India and Brazil have returned to levels of growth seen before the economic crisis, while the United States, Europe and Japan remain saddled with low growth and high unemployment. European countries in particular, facing market pressures over their spiralling debt levels, have been forced to begin cutting public spending with their economies still sputtering. The G24 ministers in a statement warned that the "simultaneous and broad-based fiscal consolidation that is presently underway in many advanced economies poses considerable risks of a downward spiral in global demand." The G24 ministers were gathering in Washington on the sidelines of an annual meeting of the International Monetary Fund and World Bank.
