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G20 to use ‘all tools’ to boost sagging growth
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FINANCE officials of the world’s biggest economies promised on Saturday to use “all tools” to shore up sagging global growth and to avoid devaluing their currencies to boost exports, but made no pledges of joint action.
Finance ministers and central bankers of the Group of 20 rich and developing countries tried to reassure jittery financial markets that the global economy is healthy, though they acknowledged in a statement that they “need to do more” to boost growth.
The declaration following a two-day meeting promised “growth-friendly” tax and spending policies. The governments pledged to press ahead with previously promised reforms aimed at making their economies more efficient and productive.
“We agreed to use all tools — monetary, fiscal and structural — to boost growth,” Chinese Finance Minister Lou Jiwei said at a news conference.
What each country does will be dictated by its circumstances, Lou said. He said some can afford stimulus while others where debt is high have to move faster on structural economic reforms.
Companies and investors were looking to the Shanghai meeting for reassurance and action. But leaders from the US, China, Europe and elsewhere had tried to squelch expectations that it would produce specific growth plans.
Global growth is at its lowest in two years and forecasters say the danger of recession is rising. The International Monetary Fund cut this year’s global growth forecast by 0.2 percentage points last month to 3.4 percent. It said another downgrade is likely in April.
The G20 statement acknowledged that “vulnerabilities have risen” in the global economy against a backdrop that includes volatile capital flows, the European refugee crisis and the possibility of a British exit from the European Union. But it said that growth should continue at a “moderate pace” in advanced economies and “remains strong” in developing countries.
The governments promised to avoid “competitive devaluations” of their currencies to boost exports — a key concern of global markets following turmoil over China’s yuan.
“We will not target our exchange rates for competitive purposes,” the statement said.
In a video message on Friday to the meeting, Premier Li Keqiang said Beijing had the resources to combat downward pressure on growth that fell to a 25-year low of 7.3 percent last year.
“The Chinese economy has great potential, resilience and flexibility, and we will capitalize on such strengths,” Li said.
A repeated theme from officials was that governments need to speed up economic reforms because multiple rounds of stimulus by central banks and treasuries used since the 2008 global crisis are no longer effective.
A previous G20 meeting in Australia produced some 800 promised reforms aimed at simplifying regulation and boosting trade, technology and job creation, but many have yet to be carried out.
On Friday, German Finance Minister Wolfgang Schauble said his government would refuse to take part in any new joint stimulus in the event of falling global growth.
Others at the meeting included US Federal Reserve Chairwoman Janet Yellen, Mario Draghi of the European Central Bank and counterparts from Europe, South Korea, India and South Africa.
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