G20 warn of Brexit risk to global growth

The Myanmar Times - - Business -

BRI­TAIN’S vote to leave the Euro­pean Union height­ens risks for the world econ­omy, fi­nance chiefs from the G20 group of lead­ing coun­tries said yes­ter­day.

The out­come of last month’s ref­er­en­dum “adds to the un­cer­tainty in the global econ­omy”, they said in a com­mu­niqué af­ter a meet­ing in China.

But they in­sisted that EU mem­ber coun­tries were “well po­si­tioned to proac­tively ad­dress the po­ten­tial eco­nomic and fi­nan­cial con­se­quences” of the vote, adding, “In the fu­ture, we hope to see the UK as a close part­ner of the EU.”

The G20 cited sev­eral other fac­tors com­pli­cat­ing the global eco­nomic en­vi­ron­ment, among them “geopo­lit­i­cal con­flicts, ter­ror­ism and refugee flows”.

But par­tic­i­pants said Brexit was at the fore­front of con­cerns at the meet­ing in Chengdu, the last be­fore the group­ing’s an­nual sum­mit in the Chi­nese city of Hangzhou in Septem­ber.

Bri­tain’s fi­nance min­is­ter Philip Hammond – who was seated in the front row of a group photo yes­ter­day – told re­porters the sub­ject had come up “a great deal”.

“The re­al­ity is there will be a mea­sure of un­cer­tainty con­tin­u­ing right up to the con­clu­sion of our ne­go­ti­a­tions with the EU,” he said.

Be­fore the meet­ing, the In­ter­na­tional Mone­tary Fund (IMF) down­graded its fore­casts for global growth this year and next by 0.1 per­cent­age point, to 3.1 per­cent and 3.4pc re­spec­tively.

“Brexit marks the ma­te­ri­al­i­sa­tion of an im­por­tant down­side risk to global growth,” IMF staff said in a re­port ahead of the meet­ing, adding that as it was “still very much un­fold­ing, more neg­a­tive out­comes are a dis­tinct pos­si­bil­ity”.

Of­fi­cials in Chengdu said pro­tracted or ac­ri­mo­nious talks be­tween the EU and Bri­tain over the depar­ture could heighten the dan­gers.

“It won’t mean that they’ll get there in a week or a month. It’s a process that could take longer,” a se­nior US Trea­sury of­fi­cial told jour­nal­ists on July 23.

“The thing that would be very dis­rup­tive to con­fi­dence is if this be­comes a highly con­fronta­tional process,” he said.

Other chal­lenges threaten: a slow­down in the Chi­nese econ­omy, as well as ter­ror­ist at­tacks and the failed coup in Turkey.

Ear­lier this month 84 peo­ple were killed in the French Riviera city of Nice when a Tu­nisian truck driver – sus­pected to be in­spired by the Is­lamic State ji­hadist group – ploughed a 19-tonne ve­hi­cle through a hol­i­day crowd.

Last week a Ger­man-Ira­nian gun­man – be­lieved not to be con­nected to the Is­lamic State group but “ob­sessed” with mass killers – shot dead nine peo­ple in the Ger­man city of Mu­nich be­fore killing him­self.

“We con­demn, in the strong­est pos­si­ble terms, the re­cent ter­ror­ist at­tacks,” the com­mu­niqué said. “We reaf­firm our sol­i­dar­ity and re­solve in the fight against ter­ror­ism in all its forms and wher­ever it oc­curs.”

But the doc­u­ment did not men­tion the at­tempt to de­pose Pres­i­dent Re­cep Tayyip Er­do­gan or the sub­se­quent wide­spread crack­down on his op­po­nents.

Con­cerns about slow­ing growth in China, the world’s sec­ond-largest econ­omy, have re­ceded into the back­ground at the G20. Bei­jing has em­barked on a fun­da­men­tal tran­si­tion in­tended to make do­mes­tic con­sump­tion the key eco­nomic driver in­stead of mas­sive pub­lic spend­ing and cheap ex­ports.

At an ear­lier meet­ing in the Chi­nese com­mer­cial hub Shang­hai in Fe­bru­ary, the G20 fi­nance chiefs agreed to use “all pol­icy tools” in­clud­ing mone­tary eas­ing, fis­cal spend­ing and struc­tural change to boost growth.

The IMF has called on some coun­tries, no­tably Ger­many and the United States, to in­crease spend­ing on in­fra­struc­ture, which has been op­posed by Ber­lin.

“The world econ­omy is be­lea­guered with many se­ri­ous prob­lems,” Chi­nese fi­nance min­is­ter Lou Ji­wei, who hosted the meet­ing, said on July 23.

“We should make mone­tary pol­icy more for­ward-look­ing and trans­par­ent, en­hance the ef­fec­tive­ness of fis­cal pol­icy ... so as to sup­port stronger re­cov­ery of the world econ­omy.”

PER­CENT 3.3 The In­ter­na­tional Mone­tary Fund’s fore­cast for global growth this year

Photo: AFP

Bri­tain’s Fi­nance Min­is­ter Philip Hammond (cen­tre) speaks with del­e­gates at the G20 fi­nance min­is­ters meet­ing in Chengdu, China, on July 24.

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.