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 In a communique issued after their meeting in Washington, G20
finance ministers and central bank governors repeated their pledge
to refrain from competitive currency devaluations, but offered no
new initiatives to keep growth from stalling.
The G20 officials took a slightly more positive view on financial
markets, which they said had mostly recovered from sharp selloffs
earlier this year and were in better shape since they last met in
Shanghai in February.
"However, growth remains modest and uneven, and downside risks and
uncertainties to the global outlook persist against the backdrop of
continued financial volatility, challenges faced by commodity
exporters and low inflation," they said.
The communique also pointed to Britain's possible exit from the
European Union, geopolitical conflicts, terrorism and refugee flows
as complications for the global economic landscape.
The statement repeated G20 pledges to "use fiscal policy flexibly"
to strengthen growth, job creation and confidence. It kept language
that member countries "will continue to explore policy options,"
adding that they would be "tailored to country circumstances."
"There's not a one-size-fits-all answer" to boost growth, U.S.
Treasury Secretary Jack Lew told a news conference, adding that each
country needed to decide for itself how best to apply structural
reforms, monetary policy and fiscal spending.
But he emphasized that it was important for Japan and China to
pursue structural reforms - China to reduce excess industrial
capacity and Japan to reform agriculture and other key sectors. Both
of these would require some social spending to support displaced
workers, Lew added.
The G20 gathering, the highlight of the International Monetary Fund
and World Bank spring meetings in Washington, came amid growing
pressure on richer nations to boost infrastructure spending,
deregulate industries and spur employment.
Earlier this week the IMF cut its 2016 growth forecast for the world
economy, the fourth such move in less than a year.
The meetings this week also coincided with weakness in a number of
key commodity-based economies, particularly Brazil, which is
enduring its worst recession in decades.
After release of the so-called "Panama Papers" earlier this month
stirred up controversy over global elites' widespread use of
off-shore tax havens to shield their wealth, the G20 officials
strengthened their pledge to implement measures to combat
exploitation of tax law mismatches and improve tax information
sharing.
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They said "defensive measures will be considered by G20 members
against non-cooperative jurisdictions" if progress toward these
goals is not made.
CURRENCY UNEASE
Despite the repeat of currency pledges, differences over exchange
rates, particularly a weaker dollar, and negative interest rates at
some central banks were readily apparent at the Washington meetings.
Japanese Finance Minister Taro Aso said the G20 agreements on
currencies did not preclude appropriate action in the currency
market to prevent excessive and disorderly exchange rate movements.
The yen earlier this week hit a 17-month high against the dollar.
German Finance Minister Wolfgang Schaeuble this week has warned of
the fallout from the European Central Bank's negative rate policies,
saying it would hurt bank profitability and German savers.
And ECB sources told Reuters that European Central Bank is unhappy
with the U.S. dollar's recent fall but accepts it as a natural
consequence of the Federal Reserve's cautious economic outlook and
sees no reason to act to weaken the euro.
"With the Fed's lowered rate path comes a weaker dollar and we need
to avoid even the impression that we're targeting the exchange
rate," one of the three sources said.
(Reporting by David Lawder; Additional reporting by Jason Lange,
Balazs Koranyi, Jan Strupczewski, Lindsay Dunsmuir, Leika Kihara,
Gernot Heller and Koh Gui Qing; Editing by Paul Simao and Andrea
Ricci)
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