Be ready to face unexpected economic slowdown, EU to tell G-20

People queue up to buy face masks at a pharmacy in Taipei, Taiwan.
People queue up to buy face masks at a pharmacy in Taipei, Taiwan.PHOTO: EPA-EFE

BRUSSELS (REUTERS) - European Union finance ministers will warn their counterparts from the world's most industrialised nations they should get ready to face a potentially large global slowdown, an EU document seen by Reuters says.

The warning adds to concerns over the impact of the coronavirus outbreak in China whose death toll spiked on Thursday (Feb 13) after a new testing method for infections was introduced in Hubei province, the epicentre of the epidemic.

Without explicitly mentioning the coronavirus, the EU will tell a Group of 20 meeting of finance ministers next week that the world should get ready for unexpected bad news.

"The G-20 should safeguard against downside risks and be ready to respond to a larger than expected slowdown," the EU's internal document says.

Earlier on Thursday, the European Commission, the EU executive arm, said the coronavirus epidemic represented a key downside risk for economic growth, although its impact was difficult to gauge at the moment.

Global growth is estimated to have slowed in the last quarter of 2019, but is forecast to pick up speed this year.

The International Monetary Fund forecast in early January that world output would rise 3.3 per cent this year, up from 2.9 per cent in 2019 but down from its previous estimate of a 3.5 per cent expansion.

The EU text will be adopted on Tuesday at a meeting of EU finance ministers before being distributed at a G-20 meeting of finance ministers and central bank governors on Feb 20-23 in Riyadh.

"Global economic growth remains weak, amid signs of stabilisation, in particular in global manufacturing," the document says, adding that trade tensions remain elevated even after last months initial trade deal between the United States and China.

"Geopolitical tensions remain high. Resolving those tensions deserves the highest order of priority," the document adds, urging the G-20 to continue its work to address global imbalances.