Finance leaders from the Group of 20 major economies on Friday explored ways to guard the global economy from threats including rising trade tensions as they prepared to wrap up a meeting in Bali, Indonesia.
But the central bank governors and finance ministers are unlikely to produce clear solutions, leaving it to their countries’ leaders to clear a path toward reconciliation at summit talks next month.
(Handout photo of G-20 finance ministers and central bank governors in Bali on Oct. 11)
U.S. President Donald Trump and Chinese President Xi Jinping are reportedly planning to meet on the sidelines of the summit in Buenos Aires where the focus will be on whether they can agree to de-escalate the heightened trade tensions between the world’s two largest economies.
Trump’s mission to resolve the hefty U.S. trade deficit has seen Washington raise tariffs on nearly half of the products America imports from China and threaten to do the same for the remainder. Beijing has answered with tariffs of its own, raising concerns that the tit-for-tat blows could hurt the global supply chain.
In a sign that such concerns are beginning to materialize, the International Monetary Fund earlier this week cut its forecasts for global growth in 2018 and 2019.
«If these tensions escalate, the global economy would take a significant hit,» warned IMF chief Christine Lagarde on Thursday. «So our strong recommendation is to de-escalate those tensions, and work toward a global trade system that is stronger, that is fair, and that is fit for growth.»
The spread of protectionist policies has countries that rely on exports, like Japan, worried. Trump has threatened to impose steep automobile tariffs on imported cars including those from Japan, though he promised to shelf those plans while the two countries negotiate a bilateral trade deal that could open up Japan’s agriculture market.
«Inward-looking policies that utilize protectionist measures are of benefit to no country,» Japanese Finance Minister Taro Aso told his G-20 peers in the first day of the two-day conference.
Another major concern discussed at the meeting in Bali’s Nusa Dua resort is the vulnerability of emerging markets to an outflow of capital triggered by the raising of interest rates in the United States.
The currencies of countries like Argentina, Turkey and South Africa have sharply depreciated amid the U.S. Federal Reserve’s normalization of monetary policy following years of keeping borrowing costs near zero.
Jitters over the rate hikes triggered a global selloff in stocks this week that chipped more than 1,300 points off the Dow Jones Industrial Average over just two days.
All — Kyodo News+