G20 economies strive to boost growth

By Song Shengxia in Chengdu Source:Global Times Published: 2016/7/24 23:33:00

Political uncertainty, financial market volatility primary concerns: IMF


Finance ministers and central bank governors pose for a "family photo" at the G20 finance ministers meeting in Chengdu, captial of Southwest China's Sichuan Province, on Sunday. Photo: AFP



Finance officials from 20 major economies pledged on Sunday to adopt all necessary policy measures to help boost growth to counter against the uncertainty facing the global economy following Britain's vote to leave the EU.

"We reiterate our determination to use all policy tools - monetary, fiscal and structural - individually and collectively to achieve our goal of strong, sustainable, balanced and inclusive growth," said a communiqué released at the conclusion of the two-day meeting of finance ministers and central bankers from G20 countries.      

This was the first major G20 meeting since Britain voted to leave the EU last month, the impact of which dominated discussions in Chengdu, capital of Southwest China's Sichuan Province.

"We met at a time of political uncertainty from the Brexit vote, and continued financial market volatility," Christine Lagarde, Managing Director of the IMF said in a statement issued after the meeting.  

According to Lagarde, persisting lackluster growth post-financial crisis, weak demand in advanced economies and challenges for emerging countries to transition to a sustainable growth model prompted the organization to further revise its projection for global growth in 2016 and 2017.  

On July 19 the IMF downgraded its forecast for global economic growth by 0.1 percentage point to 3.1 percent this year and 3.4 percent in 2017.

China's economy faces an even more complicated external environment, following Britain's vote to leave the EU, Zhou Xiaochuan, China's central bank governor said at the conclusion of the meeting.

The Chinese government will maintain stability and continuity in its macroeconomic policy and focus on pushing ahead with supply-side reform, which is an inevitable course for China as it tackles economic structural problems such as overcapacity, according to Zhou.

China's GDP grew 6.7 percent in the second quarter from a year earlier, beating market expectations. While downgrading the global growth forecast last week, the IMF upgraded its growth projection for the Chinese economy in 2016 to 6.6 percent.

During a question and answer session during a press conference on Sunday, French Finance Minister Michel Sapin told the Global Times, he saw strong improvement in the openness in China's economy and that the country had adopted realistic approaches to address its structural problems such as overcapacity.  

"In the long term, major economies face problems such as increasingly narrower scope for fiscal spending and debt expansion, aging population, slow progress in their labor market reform as well as trade and investment protectionism as a result of the rise of populism," Huang Zhilong, director of the Macroeconomic Center at the Beijing-based Suning lnstitute of Finance told the Global Times. 

According to Huang, China faces the same problems as other major economies but appears to be in a better position to cope with these challenges because China has greater scope to expand fiscal spending and debts, with its government debt-to-GDP ratio below 60 percent.

The country also faces less pressure from depreciation of the yuan given its more predictable and transparent pricing mechanism in the yuan exchange rate, Huang said.



Posted in: Economy

blog comments powered by Disqus