ANKARA • The Group of 20 (G-20) finance ministers and central bank chiefs yesterday pledged to act decisively to shore up stuttering global growth and refrain from unsettling currency moves after China's controversial devaluation last month.
The economic supremos from the world's top 20 economies said in a communique after their two-day meeting in Ankara, Turkey, that global growth was falling short of expectations, despite strengthening activity in some economies. Their statement did not refer specifically to China but contained a clear pledge not to resort to competitive currency devaluations to give an unfair advantage to domestic exports.
"Global growth falls short of our expectations. We have pledged to take decisive action to keep the economic recovery on track and we are confident the global economic recovery will gain speed," the statement said.
The group vowed to "carefully calibrate and clearly communicate our actions... to minimise negative spillovers, mitigate uncertainty and promote transparency" as key global economies search for robust growth.
The meeting came after financial markets worldwide were rattled by China's clouding growth prospects, drastic loss in value of the stock market and its sudden devaluation of the yuan last month. In a signal to China to tread carefully in its foreign exchange policies, the G-20 vowed to "refrain from competitive devaluations and resist all forms of protectionism".
The G-20 vowed to "carefully calibrate and clearly communicate our actions... to minimise negative spillovers, mitigate uncertainty and promote transparency" as key global economies search for robust growth.
"We reiterate our commitment to move towards more market-determined exchange rate systems and exchange rate flexibility... and avoid persistent exchange rate misalignments," it said.
US Treasury Secretary Jacob Lew pressed his Chinese counterpart to improve communication of economic policy and refrain from competitive devaluations.
In an unusually strongly worded statement, a US Treasury spokesman said Mr Lew also noted it was important for China to signal that it will allow market pressures to drive the yuan "up as well as down".
"It would be a very bad thing for the global economy if we get into a pattern of competitive devaluation," a senior US Treasury official told reporters.
The official said there had been "detailed discussions" but the group was agreed that "competitive devaluation is a threat that has to be guarded against".
Meanwhile, a long shadow has been cast by uncertainty over the monetary policy of the Federal Reserve, which has held its benchmark federal funds rate at the zero level since 2008. While economists say the current robustness of the US economy could justify a rate hike, the so-called lift-off from zero would suck up liquidity badly needed by troubled emerging markets.
The statement said the G-20 noted "that in line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies".
It called on governments and central banks not to overuse interest rates as a tool for boosting economic activity and instead implement fiscal policies to support growth and job creation.
"Over-reliance on monetary policy will not lead to balanced growth," the communique said.