G-20 to use 'all policy tools' for strong growth

Finance ministers and central bank governors pose for a  photo at the G20 finance ministers meeting in Chengdu, China on July 24.
Finance ministers and central bank governors pose for a photo at the G20 finance ministers meeting in Chengdu, China on July 24. PHOTO: AFP

CHENGDU • The world's biggest economies will work to support global growth and better share the benefits of trade, policymakers said yesterday after a meeting dominated by the impact of Britain's exit from Europe and fears of rising protectionism.

Mr Philip Hammond, Britain's new finance minister, said the uncertainty about Brexit would begin to abate once Britain laid out a vision for a future relationship with Europe, which could become clearer later this year.

But there could be volatility in financial markets throughout the negotiations in the years ahead, Mr Hammond said after the meeting of finance ministers and central bankers from the Group of 20 (G-20) major economies in China's south- western city of Chengdu.

"What will start to reduce uncertainty is when we are able to set out more clearly the kind of arrangement we envisage going forward with the European Union," he told reporters.

"If our European Union partners respond to such a vision positively - obviously it will be subject to negotiation - but positively, so there is a sense perhaps later this year that we are all on the same page in terms of where we expect to be going. I think that will send a reassuring signal to the business community and to markets."

A communique issued by the G-20 ministers at the end of the two-day meeting said Brexit had added to uncertainty in the global economy, where growth was "weaker than desirable". It added that members, however, were "well-positioned to proactively address the potential economic and financial consequences".

"In the light of recent developments, 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."

The International Monetary Fund last week cut its global growth forecasts because of the Brexit vote.

Whereas monetary policy figured prominently in previous meetings of G-20 financial officials, Bank of France governor Francois Villeroy de Galhau said there was very little debate this time and discussions focused instead on growth.

That was echoed by others. There was broad consensus that the global economy needed more growth, US Treasury Secretary Jack Lew told reporters, while Chinese Finance Minister Lou Jiwei said it was easier to forge a consensus because global recovery remained weak.

The spectre of protectionism, highlighted not only by Brexit but also by US Republican presidential candidate Donald Trump's "America First" rhetoric and talk of pulling out of trade agreements, was also a focus for the policymakers.

In the communique, the G-20 underscored "the role of open trade policies and a strong and secure global trading system in promoting inclusive global economic growth".


A version of this article appeared in the print edition of The Straits Times on July 25, 2016, with the headline 'G-20 to use 'all policy tools' for strong growth'. Print Edition | Subscribe