G-20 ministers call for greater dialogue on trade tensions
Finance ministers and central bankers from the world’s largest economies meeting in Argentina said heightened trade and geopolitical tensions pose an increased risk to global growth and have called for greater dialogue, according to a draft communique from the meeting.
The draft reviewed by Reuters, which is still subject to possible revisions, also noted that emerging market economies are better prepared to adjust to external shocks but they still face challenges from market volatility and reversals of capital flows.
“Global economic growth remains and unemployment is at a decade low. However, growth has been less synchronized recently and downside risks over the short- and medium-term have increased,” the draft said.
“These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality and structurally weak growth, particularly in some advanced economies.”
The draft communique emphasized that structural reforms were needed to enhance the potential growth of economies, and reaffirmed commitments from the previous G-20 finance ministers meeting in March to refrain from competitive devaluations that could have adverse effects on global financial stability.
The ministers reaffirmed the conclusions from G-20 leaders at their most recent summit in Hamburg in July last year, when they emphasized that trade was an engine of global growth and reaffirmed the importance of multilateral trade agreements.
“We...recognize the need to step up dialogue and actions to mitigate risks and enhance confidence,” the draft said. “We are working to strengthen the contribution of trade to our economies.”
The International Monetary Fund (IMF) also warned world economic leaders on July 21 that a recent wave of trade tariffs would significantly harm global growth, a day after U.S. President Donald Trump threatened a major escalation in a dispute with China.
IMF Managing Director Christine Lagarde said she would present the G-20 finance ministers and central bank governors with a report detailing the impacts of the restrictions already announced on global trade.
“It certainly indicates the impact that it could have on GDP (gross domestic product), which in the worst case scenario under current measures ... is in the range of 0.5 pct of GDP on a global basis,” Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne.
In the briefing note prepared for G20 ministers, the IMF said global growth may peak at 3.9 percent in 2018 and 2019, while downside risks have increased due to the growing trade conflict.
Her warning came shortly after the top U.S. economic official, Treasury Secretary Steven Mnuchin, told reporters in the Argentine capital there was no “macro” effect yet on the world’s largest economy.