At an earlier G20 meeting in February, finance ministers vowed to use “all policy tools” – monetary, fiscal and structural – to support economic growth.
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“What we saw in the second quarter – and are still seeing now – is the initial impact of this uncertainty”.
Chinese finance minister Lou Jiwei said that enterprise and global trade structures had changed “dramatically, imposing severe challenges to the existing worldwide tax system”.
But the discussion as the G20 finance ministers and central bank chiefs met in Chengdu, in southwestern China, was wider, addressing base erosion and profit shifting, known as BEPS.
The G20, also called Group of Twenty, is a global forum for the governments and central bank governors from the world’s twenty major economies including the United States, the European Union, China, Japan, Argentina, Australia, Brazil, Canada, France, Germany, India, Indonesia, Italy, South Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey.
On Sunday IMF managing director Christine Lagarde said the G20 had taken place at a time of “political uncertainty from the Brexit vote and continued financial market volatility”.
“‘Brexit’ marks the materialisation of an important downside risk to global growth”, the International Monetary Fund staff said in a report ahead of the meeting, adding that as it was “still very much unfolding, more negative outcomes are a distinct possibility”.
“Different countries are in different situations”, he said, and governments that had room to support investment should do so, “even if one country or another disagrees”.
But they insisted that G20 countries were “well positioned to proactively address the potential economic and financial consequences” of the vote, adding: “In the future, we hope to see the United Kingdom as a close partner of the European Union”.
In a joint statement after a two-day meeting, envoys of the Group of 20 also rejected trade protectionism, an issue that has risen in prominence as U.S. Republication presidential candidate Donald Trump has talked about restricting access to American markets.
Overcapacity coupled with weak economic growth around hte world has caused a negative impact on trade and workers. Overcapacity was a “global issue which requires collective responses”. According to FMT, the Indonesian news agency, Li pointed out the “sound fundamentals of China’s economy despite facing strong downward pressures”.
Lew, in a bilateral meeting with Japanese Finance Minister Taro Aso, reiterated the need for G20 members to refrain from competitive devaluations.
Bank of Japan Governor Haruhiko Kuroda said on Saturday he would ease policy further if necessary to achieve its 2 percent inflation goal, but again shrugged off talk of the BOJ taking the radical policy step of “helicopter money”.
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Lew said commitments by G20 members to refrain from competitive currency devaluations have helped sustain economic confidence, according to a US statement summarising discussions between the two finance chiefs.
