WASHINGTON – Finance chiefs of the Group of 20 major economies broadly shared the view that the world economy will pick up in the second half of this year before posting higher growth next year, a Japanese delegation source said Thursday.
But some G20 members cited the U.S.-China tariff war, high levels of debt incurred by China and other emerging countries, and a potentially disorderly exit by the United Kingdom from the European Union as risk factors for global growth, the source told reporters after the first day of a two-day meeting in Washington.
Finance Minister Taro Aso and Bank of Japan Gov. Haruhiko Kuroda led the meeting under Japan’s first presidency of the group, which will culminate in a G20 summit hosted by Prime Minister Shinzo Abe in late June in Osaka.
Speaking to reporters after Thursday’s session, Aso said that despite a slowdown in the second half of 2018, the world economy is likely to gather steam in the latter half of 2019.
Aso attributed the optimism to easing global financial conditions propelled by the U.S. Federal Reserve’s recent decision to pause its credit-tightening cycle, and an improved outlook for the trade negotiations between Washington and Beijing.
Aso briefed his G20 counterparts about Japan’s plan to raise consumption tax by 2 percentage points to 10 percent in October as part of efforts to ensure a sustainable social security system amid the rapid graying of the population.
Kuroda referred to a similar global economic outlook and expressed hope that the U.S.-China talks will lead to a deal to end the dispute, which has involved tit-for-tat tariffs on each other’s imports.
“Such protectionist moves would not be a plus for both sides,” he told reporters separately.
Kuroda called for promotion of free trade as a driver of global growth, saying that trade under World Trade Organization rules has made significant contributions to world economic growth.
“All G20 members, including both countries, need to make efforts to that end,” he said, referring to the United States and China.
In its latest outlook, released Tuesday, the International Monetary Fund forecast that the world economy will grow 3.3 percent in 2019 — down 0.2 percentage point from its January estimate. The projected growth rate for 2020 was unchanged at 3.6 percent.
IMF Managing Director Christine Lagarde said Thursday that the global economy is “at a delicate moment,” and that the expected rebound to 3.6 percent “is precarious and is subject to downside risks” such as trade tensions and issues involving Brexit.
“We need to better address unfair trade practices and distortions in the system, including through a WTO system reform,” Lagarde said at a news conference. “We need to avoid self-inflicted wounds, including tariffs and other barriers.”
On Friday, the G20 finance ministers and central bank governors will discuss global imbalances, the aging society, quality infrastructure, debt sustainability and international taxation, but they have no plan to issue a post-meeting communique, according to the Japanese delegation source.
The delegates gathered in the U.S. capital for spring meetings of the IMF and the World Bank.
The G20 groups 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.