Leaders warn recovery could falter without help

Thu Jan 28, 2010 3:41pm EST
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By Tamora Vidaillet and Krista Hughes

DAVOS, Switzerland (Reuters) - World leaders and policymakers in Davos are nervous the global recovery could falter, especially if governments withdraw support too quickly.

The recovery is "a mile wide but only an inch deep" and job creation very tentative, Canada's Prime Minister Stephen Harper told the World Economic Forum in Davos. He urged governments to keep economic support programs in place.

China's Vice Premier Li Keqiang said there were "twists and turns" ahead and vowed that China would maintain stable policies.

"There still remain many uncertainties in (the) domestic and external economic environment," said Li, the man tipped to become China's next premier.

"To tackle these problems, we will keep continuity and stability of our macroeconomic policies, continue to follow proactive fiscal policy and moderately easy monetary policy," he said.

Markets were roiled this week on concerns China was tightening credit too quickly, which could upset a global recovery driven largely by rapid growth in Asia. He sent a reassuring message that China would not seek to upset recovery.

South Korean President Lee Myung-bak, who heads the G20 this year, also urged member countries to tread gently as they begin to unwind extraordinary monetary stimulus measures.

So far, Australia is the only major economy to have raised interest rates. Other central banks have started to withdraw the billions of dollars in extra cash pumped into the financial system to prevent a freeze-up and economic collapse.   Continued...

<p>China's Vice-Premier Li Keqiang attends a session at the World Economic Forum (WEF) in Davos, January 28, 2010. REUTERS/Christian Hartmann</p>