G-20 na­tions face slow­ing global growth in China meet­ing to­day

The Pak Banker - - FRONT PAGE -

G-20 fi­nance min­is­ters gather in Shang­hai from Fri­day with the global econ­omy as­sailed on mul­ti­ple fronts, from China's slow­ing growth to weak com­mod­ity prices, amid sim­mer­ing dis­agree­ments over how best to face the chal­lenges. The In­ter­na­tional Mon­e­tary Fund (IMF) has warned risks of a "de­railed re­cov­ery" are grow­ing, cit­ing China's fal­ter­ing econ­omy, fall­ing oil and com­modi­ties prices and fi­nan­cial mar­ket tur­bu­lence.

That came af­ter the 34-mem­ber OECD cut its 2016 global growth fore­cast from 3.3 per­cent to 3.0 per­cent. Ahead of the G20 meet­ing among the gleam­ing tow­ers of Shang­hai's fi­nan­cial district, the IMF said: "Strong pol­icy re­sponses both at na­tional and multi-lat­eral lev­els are needed to con­tain risks and pro­pel the global econ­omy to a more pros­per­ous path." The G20 -- which groups 19 coun­tries and the Euro­pean Union -- was born in the wake of the 1997 Asian fi­nan­cial cri­sis and up­graded to a sum­mit of lead­ers in 2008 to tackle the global fi­nan­cial cri­sis. Now, global oil prices are at multi-year lows, the threat of Bri­tain leav­ing the Euro­pean Union in a pos­si­ble "Brexit" is loom­ing, and world bourses have tum­bled since the start of the year. US Trea­sury Sec­re­tary Ja­cob Lew de­nied the sit­u­a­tion had reached cri­sis lev­els, but chided other coun­tries for re­ly­ing too heav­ily on the United States to be the main en­gine for global growth. "We can't be the con­sumer of first and last re­sort. There needs to be more," he told Bloomberg Tele­vi­sion in an in­ter­view. "It means that in coun­tries that are big economies, re­gions that have big economies, they need to use pol­icy tools." Ger­man Fi­nance Min­is­ter Wolf­gang Schaeu­ble urged G20 cen­tral bankers to com­mu­ni­cate bet­ter, crit­i­cis­ing con­flict­ing US Fed­eral Re­serve an­nounce­ments on in­ter­est rates in an in­ter­view with na­tional news agency DPA. But he added: "We have to stop once and for all blam­ing each other ahead of th­ese meet­ings to di­vert the at­ten­tion from our own prob­lems." China's own tra­vails will loom over the meet­ing af­ter the world's se­cond-largest econ­omy grew 6.9 per­cent in 2015 -- the worst in a quar­ter cen­tury and a far cry from the fat years of dou­ble-digit in­creases. A shock cur­rency de­val­u­a­tion in Au­gust, which saw the nor­mally sta­ble yuan guided down nearly five per­cent in a week fol­lowed by an­other drop in Jan­uary, raised sus­pi­cions Bei­jing is pur­su­ing a cur­rency war to make its ex­ports cheaper. Chi­nese of­fi­cials have de­nied the ac­cu­sa­tions. A stock mar­ket crash start­ing in mid-June, dur­ing which China's bench­mark in­dex lost more than 40 per­cent from its peak, has also raised alarm, with tremors con­tin­u­ing this year -- the bench­mark Shang­hai Com­pos­ite In­dex slumped 6.41 per­cent on Thurs­day. "China was the main­stay of global eco­nomic growth af­ter 2008," Yale Univer­sity fi­nance pro­fes­sor Chen Zhiwu told AFP. "Now peo­ple are wor­ried about the op­po­site prob­lem with China's growth get­ting

slower and slower."

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