Ise, Mie Pref. – A two-day summit of the Group of Seven major industrial nations ended Friday with leaders broadly agreeing to better cooperate on fiscal measures to spur global growth. But they remain sharply divided on how much each country should spend.
A joint communique, issued in Ise, Mie Prefecture, lacked any specific plan or targets for joint fiscal spending, making any shift in the austere fiscal stances of Britain and Germany difficult, despite Japan’s repeated calls for other G-7 members to help reduce what it says is the risk of a “global economic crisis.”
“The focus was whether the G-7 would hammer out any new economic policies, in particular fiscal ones. But there is no surprise,” Masaki Kuwahara, a senior economist at Nomura Securities Co, told The Japan Times.
“They have confirmed the importance of fiscal policies, but each country will make its own decision depending on its own circumstance.”
Nonetheless, during a concluding news conference, Prime Minister Shinzo Abe said Japan will consider whether a second consumption tax hike, planned for 2017, should be implemented or not.
He also said he will consider implementing more fiscal measures to stimulate the Japanese economy.
“What should Japan itself do? I will consider whether the consumption tax should be raised or not, and make my decision clear by the time of the Upper House election in summer,” Abe said.
At the G-7 summit sessions, Abe reportedly emphasized that the world is now facing the risk of a “crisis,” given recent economic deterioration and fast capital outflows in emerging economies such as China.
But Abe seemingly failed to win consensus from other members, with the communique ultimately only noting that “downside risks to the global outlook have increased” since last year’s G-7 summit.
The communique said that while G-7 countries would take into account “country-specific circumstances” in implementing their monetary, fiscal and structural reform measures, these would be nonbinding, effectively shooting down the aggressive fiscal measures Abe had been calling for.
For Japan, Abe’s urgent emphasis on averting a potential global crisis is seen as signaling his readiness to again postpone the planned consumption tax hike ahead of July’s Upper House elections.
Media reports say Abe could announce the unpopular plan’s postponement Wednesday or earlier, citing the risk of a global economic crisis and the expected adverse impact on still-weak domestic consumption.
The plan, if implemented, would see the consumption tax rate hiked to 10 percent from the current 8 percent.
In the communique, the G-7 agreed on “the importance of strengthening our efforts in a cooperative manner to implement our fiscal strategies flexibly.”
Meanwhile the G-7 members — the United States, Britain, Germany, France, Italy, Canada, Japan and the European Union — expressed opposition to a proposed exit of Britain from the EU, saying it would “reverse the trend toward greater global trade and investment, and the jobs they create,” the communique said.
On diplomacy, the 32-page G-7 statement expressed concern “about the situation in the East and South China Seas,” in a likely reference to China’s growing assertiveness over territorial claims in the waters.
The G-7 reaffirmed its commitment to “respecting freedom of navigation and overflight” and called for the peaceful resolution of disputes. Despite not naming China, it is likely to draw criticism from Beijing.
The statement also urged member nations to further promote free trade talks, including the domestic ratification of signatories to the Trans-Pacific Partnership deal.
The U.S. and Japan are TPP signatories, but it remains unclear whether the U.S. Congress will ratify the pact. It has also faced opposition from all major U.S. presidential candidates, who have criticized the pact in its current form.
The G-7 leaders also agreed to place the highest priority on addressing the “humanitarian consequences” and “root cause of massive displacement” surrounding the current Syrian refugee crisis.
Specifically, they expressed determination to combat migrant smuggling and modern slavery and safeguard victims of human trafficking.
In response to an increasingly bellicose North Korea, the G-7 leaders said they condemn “in the strongest terms” its nuclear test in January and its repeated launches involving ballistic missile technology. They said these acts violate U.N. Security Council resolutions and “pose a grave threat” to regional peace and security.
North Korea should “immediately and fully” comply with all relevant U.N. security resolutions, steer clear of any more nuclear tests and address the global community’s concerns, including its abduction of Japanese citizens, they said in the communique.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.