On today's menu: dark economic news - hold the garlic

SUBJECT: Lunch today at the Economic Summit in Genoa, Italy

Mr. President, we know you love Italian food, but you may have to eat quickly - this is a working lunch to discuss the world economy.

Although it's important to stress the positive - look at how good things appeared in England when you were there yesterday - there is a lot of pressure to address the weakening world outlook.

Private economists are now forecasting that there will be some kind of "synchronized slowdown" in the US, Europe, Asia and Latin America. It's still too early to call it a global recession - Merrill Lynch, for example, just calls it a "slump," but, there are clearly some people who are really worried.

For example, this meeting can definitely help Japanese Prime Minister Junichiro Koizumi. Japan's economy is a real mess. For the past decade, it has had virtually no growth and now may be in a recession. Mr. Koizumi is going to tell you about his plans to restructure the economy.

He has already pledged to reduce government spending on bridges, dams and roads. However, construction represents 1 out of every 10 jobs in his country, so any cutback may mean that unemployment - now at 4.8 percent - will rise. And he's pressing the banks to write off their worst loans, which may also make the situation worse before it gets better. As one commentator noted, he would benefit from having the summit endorse his reforms.

As you look across the table, Germany's chancellor, Gerhard Schroder, won't be all smiles either. The German economy is rapidly weakening, and he blames us for slowing down his export-oriented companies. Exports make up 30 percent of the German economy, and one-tenth of that goes to the US. So, the US is only responsible for 3 percent of his gross domestic product.

But German unemployment is rising - electronics giant Siemens recently announced it was laying off a bunch of people in its computer operations. A new round of layoffs could push unemployment close to 10 percent by the end of the year. You might ask Mr. Schroder about labor-market reforms and other structural changes. But he's already ruled those out. Instead, he's counting on a tax-cut package and pension reform to stimulate growth.

French President Jacques Chirac could be more accommodating. The French economy is expected to grow by 2.5 percent this year, probably about the same as the US. However, if Germany and the US performed better, so would France. You have something in common with Mr. Chirac: tax cuts. The French economy will get a boost from cuts worth $6.7 billion.

Despite the economic growth, the unemployment rate in the country remains high - close to 9 percent. It may even be higher, because the French government provides significant incentives to encourage early retirement. And, to keep it from going higher still, the government is doubling the required severance pay and encouraging small businesses to adopt a 35-hour work week for its employees.

On your left will be Tony Blair - no need for introductions since you just left England. Of all the Europeans, he's the most upbeat. His economy is booming by European standards, and employment is at a record high.

Prime Minister Blair's enthusiasm will be matched by Vladimir Putin, still proud of the Russian economy's 8 percent growth last year. Even with the West slowing, the Russian economy will continue to grow by 3 to 4 percent this year. But someone is bound to ask him about structural reforms - only this week the International Monetary Fund said it was disappointed he had not gotten more accomplished.

You know all about the Canadian economy since you were just in Quebec City at the Summit of the Americas. But Prime Minister Jean Chretien is worried that any downturn in the US will spill over to his country - after all, 83 percent of Canada's exports go to the US.

You need to be prepared for some lively give-and-take during lunch. When Ronald Reagan came to his first summit, the other leaders had low expectations. But people who were there say he gave as good as he got. When you have dinner tonight to discuss world poverty, the tone will be quite different.

Oh, and don't worry about the pesto - Italian Premier Silvio Berlusconi has banned the chefs from using garlic.

(c) Copyright 2001. The Christian Science Monitor

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