World Economy

G-20 Nations Worried by ‘Uneven’ Global Growth

G-20 Nations Worried by ‘Uneven’ Global GrowthG-20 Nations Worried by ‘Uneven’ Global Growth

Financial leaders from the Group of 20 nations said they were heartened by a recent recovery in financial markets, but warned that global growth was "modest and uneven" and threatened by weakness in commodities-based economies.

In a communique issued after their meeting in Washington late Friday, G20 finance ministers and central bank governors repeated their pledge to refrain from competitive currency devaluations, but offered no new initiatives to keep growth from stalling, Reuters reported.

The G20 officials took a slightly more positive view on financial markets, which they said had mostly recovered from sharp selloffs earlier this year and were in better shape since they last met in Shanghai in February.

"However, growth remains modest and uneven, and downside risks and uncertainties to the global outlook persist against the backdrop of continued financial volatility, challenges faced by commodity exporters and low inflation," they said.

The communique also pointed to Britain's possible exit from the European Union, geopolitical conflicts, terrorism and refugee flows as complications for the global economic landscape.

The statement repeated G20 pledges to "use fiscal policy flexibly" to strengthen growth, job creation and confidence. It kept language that member countries "will continue to explore policy options," adding that they would be "tailored to country circumstances."

The G20 gathering, the highlight of the International Monetary Fund and World Bank spring meetings in Washington, came amid growing pressure on richer nations to boost infrastructure spending, deregulate industries and spur employment.

Earlier this week the IMF cut its 2016 growth forecast for the world economy, the fourth such move in less than a year.

The meetings this week also coincided with weakness in a number of key commodity-based economies, particularly Brazil, which is enduring its worst recession in decades.

Tax Havens

The G-20 finance officials also sent a warning Friday to tax havens hiding billions of dollars in potential revenue critical to domestic growth plans around the world.

They called on the Organization for Economic Cooperation and Development to report by July countries and jurisdictions that haven’t signed up to new international standards on tax transparency and information sharing.

“Defensive measures will be considered by G-20 members against non-cooperative jurisdictions,” the officials said in their statement.

The G-20 has been working on the issue for years, finalizing a deal last year to close international tax loopholes. But the matter drew widespread global attention after the leak of the so-called Panama Papers earlier this month.

The revelations linked scores of public figures, executives and celebrities around the world to overseas assets in offshore tax havens from the British Virgin Islands to Panama, provoking a public outcry and fueling growing inequality concerns around the globe.

 “There is one thing which has not gone very global and that is taxation, which is still very much a local affair associated with national sovereignty,” IMF Managing Director Christine Lagarde said. “International cooperation has to really be significantly improved.”

Currency Unease

Despite the repeat of currency pledges, differences over exchange rates, particularly a weaker dollar, and negative interest rates at some central banks were readily apparent at the Washington meetings.

Japanese Finance Minister Taro Aso said the G20 agreements on currencies did not preclude appropriate action in the currency market to prevent excessive and disorderly exchange rate movements. The yen earlier this week hit a 17-month high against the dollar.

German Finance Minister Wolfgang Schaeuble this week has warned of the fallout from the European Central Bank's negative rate policies, saying it would hurt bank profitability and German savers.

And ECB sources told Reuters that the European Central Bank is unhappy with the US dollar's recent fall but accepts it as a natural consequence of the Federal Reserve's cautious economic outlook and sees no reason to act to weaken the euro.

Lou Jiwei, finance minister for China, which chairs the G-20 this year, pledged results based on the OECD report. “We will take action,” he said, though he declined to elaborate on punitive sanctions the G-20 would consider for “uncooperative” tax shelters.