GLOBAL GROWTH MORE UNCERTAIN, SAYS G20

World economy facing increasing threats such as trade tension, say Group of 20 leading economies

GLOBAL economic growth is less synchronised and faces increasing threats, including from trade tensions, according to a draft statement from the Group of 20 (G20) leading economies obtained by Bloomberg News.

“Downside risks over the short and medium term have increased,” said the document.

Among the other risks to global growth, the text cites “rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances, inequality”.

The G20’s March statement didn’t exclusively mention trade tensions.

While emerging markets are better prepared, they still face market volatility and possible capital outflows, says the draft.

The finance ministers and central bank chiefs of the 20 largest economies met here over the weekend.

Meanwhile, the United States and its European Union (EU) allies were locked in a stalemate on Saturday after Treasury Secretary Steven Mnuchin refused to budge on demands for concessions.

In his opening salvo, Mnuchin urged China and the EU to respect “free, fair and reciprocal trade” amid talk of an escalating global trade conflict, but his French counterpart fired back that the US must “return to reason”.

Mnuchin was inflexible in his approach to the EU following a series of tit-for-tat measures that began with US President Donald Trump’s decision to slap tariffs on steel and aluminium imports.

“My message is pretty clear, it’s the same message the president delivered at the G7 (Group of seven): if Europe believes in free trade, we’re ready to sign a free trade agreement with no tariffs, no non-tariff barriers and no subsidies. It has to be all three,” said Mnuchin.

That brought a firm response from French finance and economy minister Bruno Le Maire at the G20 meeting, which gathered finance ministers and central bank governors from the world’s 20 leading economies.

“We refuse to negotiate with a gun to the head,” he said.

“It must be the US that takes the first step to de-escalate.”

He said he expected “a change of attitude” from Trump, otherwise “there will be no choice other than to retaliate.”

International Monetary Fund (IMF) chief Christine Lagarde opened the summit by reiterating her fears that increasing trade restrictions would hurt global gross domestic product.

Lagarde said taking into account “current announced and in process measures,” an IMF simulation indicates that in a worstcase scenario, a half point would be cut from global gross domestic product, amounting to some US$430 billion (RM1.74 trillion).

But Mnuchin showed no signs of a US willingness to back down.

Asked about Trump’s threat to hammer China with punitive tariffs on the entirety of the US$500 billion in goods it exports to the US, Mnuchin said: “It is definitely a realistic possibility, so I wouldn’t minimise the possibility.”

He added that “the balanced relationship is by us selling more goods (to China)”.

Mnuchin said China must “open up their markets so we can compete fairly” although he insisted that to do so would be “a tremendous opportunity for us and a tremendous opportunity for China”.

The brewing global trade conflict was always expected to dominate talks in the Argentine capital and Brazilian finance minister Eduardo Guardia said many delegates had spoken of “threats on the economic horizon” that “impact on economies, particularly emerging ones”.

“Global trade cannot be based on survival of the fittest,” said Le Maire.