Chengdu - Global finance ministers of the redoubled its commitment to use all the policy instruments available to stimulate economic growth, amid fears that a myriad of headwinds could push the global economy into a low-rise routine.
Among the most prominent problems of the Group of 20 largest economies in the world is surprised by the decision of the United Kingdom at the end of last month to leave the European Union. "In the future we expect to see the UK as a close partner of the EU," said the finance ministers and central bankers of the G-20 in its official statement after two days of talks.
The delegations of the United Kingdom and the EU agreed on the need to reduce the overall uncertainty surrounding the Brexit but seem to differ on timing. While the European authorities asked London not to "waste time" in solving the problem, the Minister of UK Treasury, Philip Hammond, said his country will wait to formally notify Brussels of your game when you're fully prepared for the complex negotiations about to leave.
Still, the overall uncertainty about Brexit likely to continue, said Hammond. "Uncertainty will only end when the process is complete," said the minister, adding that the Bank of England (BoE) will, in the meantime, use all necessary monetary tools if this is necessary to stabilize financial markets.
The International Monetary Fund (IMF), which acts as economic advisor to the G-20, reduced last week its growth forecast for the global economy, saying that the uncertainty fueled by Brexit will weigh on investment and consumer confidence. IMF economists and many of the G-20 finance ministers are concerned that policymakers are depending too much on monetary policy to stimulate growth and pushing each other to accelerate broad economic reforms to increase productivity and achieve a balanced budget ever possible.
"Monetary policy alone can not lead to balanced growth," the G-20.
Amid an era of currency volatility, the G20 also reiterated its commitment to avoid the use of exchange rates to gain competitive advantage and close consultation between members on exchange rate policy.
The group also called excess production capacity as a threat to the global economy, a veiled criticism of the excess production of steel and other products from China, which is mining industries abroad and inflation targets worldwide.
"We also recognize that subsidies and other support from governments or institutions sponsored by the government can cause market distortions and contribute to global overcapacity and therefore demand attention," the G-20.
Although China has not been mentioned in the statement, it is responsible for 50% of world steel production. Industries in other countries and their governments have accused the Asian giant to harm her unfairly markets by selling products at below the cost of production prices.
This has led to concern that excess capacity could become a global flashpoint in the same way that monetary policy has been over the last decade. metal exports from China threaten to exacerbate deflationary pressures with which central banks are struggling globally.
"Structural problems, including excess capacity in steel and other industries, have exacerbated a weak global economic recovery and depressed market demand and caused a negative impact on trade and workers," the G-20. Source: Dow Jones Newswires.
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