G7 pledges to seek growth

Japan’s Abe warns of global crisis

ise-shima — The Group of Seven industrial powers pledged on Friday to seek strong global growth, while papering over differences on currencies and stimulus policies and expressing concern over North Korea, Russia and maritime disputes involving China.

G7 leaders wrapped up a summit in central Japan vowing to use “all policy tools” to boost demand and ease supply constraints.

“Global growth remains moderate and below potential, while risks of weak growth persist,” they said in a declaration. “Global growth is our urgent priority.”

Japanese Prime Minister Shinzo Abe, talking up what he calls parallels to the global financial crisis that followed the 2008 Lehman Brothers bankruptcy, said the G7 “shares a strong sense of crisis” about the global outlook.

“The most worrisome risk is a contraction of the global economy,” led by a slowdown in emerging economies, Abe told a news conference after chairing the two-day summit. “There is a risk of the global economy falling into crisis if appropriate policy

Global growth remains moderate and below potential, while risks of weak growth persist

G7 leaders

responses are not made.” In the broad-ranging, 32-page declaration, the G7 committed to market-based exchange rates and to avoiding “competitive devaluation” of their currencies, while warning against wild exchangerate moves.

This represents a compromise between the positions of Japan, which has threatened to intervene to block sharp yen rises, and the United States, which generally opposes market intervention.

The G7 vowed “a more forceful and balanced policy mix” to “achieve a strong, sustainable and balanced growth pattern”, taking each country’s circumstances into account, while continuing efforts to put public debt on a sustainable path.

Abe has stressed the need for flexible fiscal policy to sustain economic recovery, while German Chancellor Angela Merkel has been sceptical about public spending to boost growth. —