Leaders of the Group of Seven (G-7) advanced economies pledged yesterday to work together to achieve strong growth, as they stressed their "special responsibility" to lead global efforts to avoid falling into another crisis.
"Global growth remains moderate and below potential, while risks of weak growth persist," the leaders said in a broad-ranging 32-page communique after a two-day summit in central Japan.
"Global growth is our urgent priority," they added, noting that weak demand and structural issues still plagued many economies.
There are also "potential shocks of a non-economic origin", the leaders said. These included the possibility of Brexit, or Britain exiting the 28-member European Union bloc following a referendum on the issue on June 23.
An exit will "reverse the trend towards greater global trade and investment and the jobs they create, and is a further serious risk to growth", said the leaders.
British Prime Minister David Cameron told a news conference yesterday that leaving the EU will hurt Britain's economic future and complicate trade deals with countries such as Japan. French President Francois Hollande also said at a separate news conference that Brexit will be "bad news" for the global economy.
The annual G-7 summit brings together leaders of Britain, Canada, France, Germany, Italy, Japan and the United States. The EU is also represented in the club.
The leaders yesterday vowed to bolster the resilience of their respective economies to avoid a crisis, saying that they would employ a "more forceful and balanced policy mix" of monetary policy, fiscal stimulus and structural reforms.
On Thursday, they had agreed on the need for flexible spending to spark world growth, but had left individual countries to decide on when and how much.
The leaders said that they are making tax policy and public spending "as growth-friendly as possible", including by prioritising expenditure in favour of high-quality investment.
"We will consider the composition of our budget expenditures and revenues to support productivity, employment, inclusiveness and growth," they said.
Host Japan has stressed the need for flexible fiscal policy to revive its economy, through Prime Minister Shinzo Abe's 'Abenomics' strategy.
Mr Abe slammed criticisms of the strategy at a press conference yesterday as "totally off the mark", saying it has helped to create jobs.
He resolved to "rev up the engine of Abenomics at the maximum level".
He also said Japan will "study and review all possibilities" on whether to proceed with a sales tax hike to 10 per cent from 8 per cent that is slated for April next year.
Local media yesterday quoted sources as saying that Mr Abe may delay this increase to 2019, and that he is expected to announce a decision around the time the current parliamentary session ends next week.
The G-7 leaders also recognised global excess capacity in sectors like steel as a "pressing structural challenge with global implications". They did not name any country, but Europe and the US have previously blamed the glut on a surge of cheap exports from China.
Mr Abe yesterday said China's cuts to its steel supply were "insufficient".
The leaders also reaffirmed their commitment to fight protectionism, as well as their position not to intervene in foreign exchange markets.
Italy will be the host for next year's summit.
