Business / Economy

G20 finance chiefs, upbeat on world economy, affirm coordination over risks

by Ko Hirano

Kyodo

Finance chiefs from the Group of 20 major economies agreed Friday to step up coordination in coping with risk factors to the world economy — such as North Korea — amid signs that 2017 will be the best year for global growth in a decade.

“The world economy is in good condition, with growth picking up in the United States, Europe, Japan, China and other emerging economies,” Bank of Japan Gov. Haruhiko Kuroda said after a two-day meeting of G-20 finance ministers and central bank governors in Washington.

But he warned: “G-20 members referred to risks. … We should not fall into complacency.”

Several members cited geopolitical risks associated with North Korea’s growing nuclear threat in Asia, the world’s growth center, Kuroda told reporters.

Kuroda also quoted the International Monetary Fund as saying that faster-than-expected credit-tightening in the United States — which could trigger reversals in capital and investment flows to emerging economies — and insufficient structural reform in China would pose risks to otherwise sound global growth.

The finance chiefs did not discuss exchange rates, according to a Japanese delegation source.

Underscoring Kuroda’s view, Jens Weidmann, president of German central bank Bundesbank, said global growth “has become more balanced across countries,” and called on the G-20 to “use the recovery as an opportunity” to achieve sustainable growth and public finance.

The IMF has predicted that the world economy will grow 3.6 percent in 2017 and 3.7 percent in 2018, up 0.1 percentage point, respectively, from its estimate in July, as a “broad-based” global recovery has gathered steam.

Despite rollbacks of monetary easing in the United States and Europe, Kuroda said he told his G-20 peers that the BOJ will continue “powerful” credit easing measures as inflation rates in Japan have hovered far below the central bank’s 2 percent target.

No G-20 member criticized Japan’s monetary policy, he added.

German Finance Minister Wolfgang Schaeuble urged members to avoid inward-looking policy, saying the temptation to pursue countries’ own interests could pose yet another risk factor to the world economy.

“There is consensus among us that multilateral cooperation is the only way to achieve global stability and inclusiveness,” Schaeuble told journalists.

Asked about Prime Minister Shinzo Abe’s plan to put off the country’s goal of achieving a primary balance surplus in fiscal 2020, Schaeuble declined to comment, opting to remain neutral ahead of Japan’s general election slated for Oct. 22.

Given that Abe and Finance Minister Taro Aso are campaigning for the election, Schaeuble said, “I think it would be wise not to comment on Japanese politics at this time.”

On the first day of the meeting, Kuroda said Abe’s election pledge to boost spending on child care and education would make it virtually impossible for the government to achieve the goal, but Japan remains committed to restoring its debt-ridden finances.

Aso skipped the meeting, and his deputy, Masatsugu Asakawa, vice finance minister for international affairs, and Kuroda represented Japan at the gathering on the sidelines of annual meetings of the World Bank and the IMF.

“I was very sad that I couldn’t meet my good friend Taro Aso because he has to campaign,” said Schaeuble, who is set to step down as finance minister to become speaker of the Bundestag, the lower chamber of the German parliament.

Among other issues, the finance chiefs discussed digitalization of the economy, increased private investment in Africa, financial regulations, labor reform and cybersecurity, according to delegates.

The G-20 includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.