Britain’s vote to leave the European Union heightens risks for the world economy, and the United Kingdom must remain a close partner of the bloc after Brexit to reduce turmoil, finance chiefs from the G20 group of leading countries have said.
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Chinese Finance Minister Lou Jiwei called for more coordination to promote sustainable growth, as fiscal and monetary tools were becoming less effective.
IMF Managing Director Christine Lagarde has made the statement at the conclusion of the Group of 20 (G20) Finance Ministers and Central Bank Governors Meeting in Chengdu, China.
Earlier French Finance Minister Michel Sapin told AFP that some countries, “not only China” were “reluctant” on questions of cooperation on tax evasion.
Department of Economic Affairs Secretary Shakthikanta Das attended the gathering, which was held ahead of G20 leaders meeting scheduled in the Chinese city Hangzhou in September.
While Monetary policy will continue to support economic activity and ensure price stability, consistent with central banks’ mandates, G20 endorsed the fact that monetary policy alone can not lead to balanced growth.
President of the European Central Bank Mario Draghi, left, and Australia’s Treasurer Scott Morrison chat during the G20 Finance Ministers and Central Bank Governors meeting in Chengdu in Southwestern China’s Sichuan provin.
Regarded as a safe haven at times of market turmoil such as that caused by Britain’s vote to leave the European Union, the yen has strengthened to around 106 to the dollar. Many countries are anxious that a long delay could add to uncertainties that are dragging on the world economy.
Apart from the British referendum vote the G20 cited several other factors complicating the global economic environment, among them “geopolitical conflicts, terrorism and refugee flows”.
Some Asian G20 countries have also joined the chorus, calling for “UK-EU negotiations to settle quickly”. She said that turmoil prompted the International Monetary Fund to cut its forecast of this year’s global growth by 0.1 percentage points.
Paying little attention to the financial crisis that Premier Li referred to, U.S. Treasury Secretary Jacob Lew, speaking to reporters in Athens before flying to Chengdu, downplayed the likelihood of joint action. “There is now broad consensus that what the global economy needs is growth – not austerity – and the discussions here have focused on how best to achieve that outcome”. “It may boost exports but it also raises import costs for China”.
Louis Kuijs, head of Asia economics at Oxford Economics in Hong Kong, said Chengdu was worth watching for the light it might shed on “what should we expect from things like Brexit and what policy steps” should be taken.
“A lot of concerns were voiced over spreading measures for protectionism”.
The G-20 economies endorsed new criteria to identify governments that are failing to cooperate with global efforts to seek transparency on taxation.
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Officials from the United States and other countries have accused China, which produces over half the world’s steel, for keeping too many steel plants afloat with subsidies and other government support and allowing excess production to be dumped onto world markets.
