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Jan 28, 2011, 10.20 AM IST
Everyone agreed that the world still has to face some tough challenges. ECB's Trichet says the Eurozone crisis is "work in progress" Stanchart's Peter Sands and Blackstone's Steve Schwartzman say a lot of work needs to be done.
Said Trichet, "Taking into account the situation of advanced economy in general and European economy in particular, I have to say the main issues to us, to the governing council of ECB is that we have to improve confidence in the capacity of authorities and governments in particular to regain control of their own situation."
Meanwhile, Blackstone Group's Steve Schwarzman is optimistic that policy uncertainty in the US is ending. Schwarzman said, "Previously there was sufficient antagonism and fear and uncertainty of what was going to happen from the government towards the business community, that made it very difficult for almost any of those actors in that drama to commit capital and to have confidence. I think that the change that’s happened since the election is really quite substantial and quite important and I think it is on the right track and beyond that I think it will get a very good response."
Harvard University professor Larry Summers says the growth potential for India and China is truly enormous. He however adds that it is important to not overlook some of the major challenges before emerging economies.
Summers said, "I think both countries have their challenges in terms of managing their complicating capital situation in terms of what’s happening to asset prices. China in particular I think there are important inflationary issues. India has important fiscal issues, so I am structurally very optimistic but at the same time I think there are real issues of macro economic management in those countries and I think that just as there was a tendency to assume about Japan in the 1980’s, the trees could grow to the sky now, there is a similar kind of tendency to extrapolate easy permanent growth in the emerging markets."
One key hurdle that fast growing economies - especially India and China, have been straddled with is high inflation. Peter Sands - the CEO, Standard Chartered feels that the central banks in the two countries have done an admirable job of proactively tackling price rise. Sands told CNBC's Maria Bartiromo that western policy makers have a lot to learn from Asian central bankers.
Sands said, “Inflationary pressures are going to be a major issue for policy makers not just in fast growing markets but also in the west. I think there is an after math to all the monetary stimulus that is been provided to the world economy which will translate into inflation. The one thing I do think though that, Asian policy makers have got right is they are already intervening very actively in things like residential property markets and the way that banks interact with commercial development and so on. The buzz word is macro prudential regulation and one of the things I think the west should learn from Asia is how to use these tools and to use them early."
PepsiCo global CEO Indra Nooyi feels inflation will be a daunting challenge for FMCG companies across the world.
Nooyi told CNBC that PepsiCo is in the process of figuring out how much of the input cost pressures can be passed on to consumers in different parts of the globe. Nooyi said, "Inflation is significant, commodity inflation around the world is pretty significant and the real test over the next few months is how much of that inflationary cost can you pass through in terms of price increases. I think we have to work our basket of countries to make sure that in some countries we can price to cover inflation plus, in other countries we may just price to cover some part of the inflation and other countries especially those where the economy is not growing, we may not be able to pass through any of the pricing because there is an inflationary, deflationary environment. Deflation on pricing, inflation on commodity costs."
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