Finance leaders from the world’s 20 major economies on Saturday will call for using every possible measure to improve market stability and prop up sagging growth, according to a draft of the statement to be issued upon conclusion of their two-day meeting.
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“There are growing concerns about the risk of further downward revision” in global economic prospects: “We agree that we need to do more to achieve our common objectives for global growth”.
The news is a fresh blow for Prime Minister Shinzo Abe after three years of trying to kick-start growth with a raft of policies that includes government spending and a massive central bank bond-buying programme.
Premier Li also highlighted the importance of supply-side structural reforms while expanding aggregate demand as appropriate.
“China will strike a balance between growth, restructuring and risk management”, People´s Bank of China (PBOC) Governor Zhou Xiaochuan said at a conference held by the Institute of International Finance (IIF) in conjunction with the G20 meeting. China faces pressure to reassure nerve-wracked world markets over how it is steering its slowing economy and managing its currency at Friday’s gathering of finance ministers and central bankers from the United States, Europe and other major economies in Shanghai.
What each country does will be dictated by its circumstances, Lou said.
Germany, with French support, objected Friday to launching a fiscal and monetary stimulus package to boost global growth, saying only structural reforms would work now.
With anxiety mounting over a global slowdown, companies and investors are looking to the meeting for reassurance and action.
But it did not express any explicit concerns over China, where growth has slowed to its weakest in 25 years.
The OECD last week cut its 2016 global growth forecast from 3.3 percent to 3.0 percent. It said another downgrade is likely in April.
– see downside risks and vulnerabilities have risen amid such developments as volatile capital flows, steep declines in commodity prices and geopolitical tensions. But it said that growth should continue at a “moderate pace” in advanced economies and “remains strong” in developing countries.
There are widespread concerns Beijing could lower the value of its yuan in order to lift its struggling export sector – at its competitors’ expense – though Chinese officials deny any such plans. Despite official denials, repeated Friday by Chinese central bank governor Zhou Xiaochuan, those expectations have driven an outflow of capital that spiked to a record $135 billion in December.
The nations reaffirmed their previous exchange rate commitments, including refraining from competitive devaluations and not targeting exchange rates for competitive purposes. Instead, the communist government is scrambling to defend its reputation for economic competence after a spate of stock market and currency turmoil. “What is desirable is innovation, deregulation, more competition, and greater openness”, said Li.
The G-20 meeting was a “platform for communication”, he added, but could not restrain any of its members and the communique “won’t have a big impact on [the] world economy”.
“While recognizing these challenges, we nevertheless judge that the magnitude of recent market volatility has not reflected the underlying fundamentals of the global economy”, the draft reads.
Earlier this week, Sheng Songcheng, director of Statistics Department at Chinese central bank in “The Economic Daily” article said that China could manage up to 70% of debt-to-GDP ratio by 2025 if the budget deficit increased to 4% of GDP.
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RBI governor Raghuram Rajan along with additional finance secretary Dinesh Sharma attended the meeting.
