Japan

Chill in global economy spurs G20 call for trade truce

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The risk that global economic growth could slow more than expected prompted a call on Friday from top finance officials for countries to overcome trade differences and opt for multilateral cooperation and"timely policy action."

Policymakers from the Group of 20 industrialized countries are worried that the weakness evident in key economies could spread, especially if elevated trade tensions, such as those between the United States and China, escalate further.

"The balance of risks remains skewed to the downside," Japanese Finance Minister Taro Aso said at a news conference following a meeting of G20 finance ministers and central bankers. "We recognize the risk that growth prospects might deteriorate if weakening in key economies feed into each other."

Aso's remarks dovetail with those of other officials gathered in Washington for the spring meetings of the World Bank and International Monetary Fund, many of whom fret that self-inflicted wounds from protectionist trade policies are to blame for the weakness. The week's proceedings kicked off with another downgrade of global growth estimates from the IMF.

Bank of Japan Governor Haruhiko Kuroda emphasized the need for countries to take steps to foster a more dynamic global economy.

"There was a shared understanding among the G20 members that each country needs to take timely policy action," Kuroda said at the news conference.

As the chair country of this year's G20 proceedings, Japan wants to deepen talks on global imbalances – an effort to divert Washington's attention from bilateral trade imbalances and stave off U.S. pressure to negotiate two-way trade deals.

German Finance Minister Olaf Scholz, speaking at an event on the sidelines of the meetings in Washington, said the rules-based order of multilateralism is increasingly under threat and leaders must uphold international cooperation.

Scholz called on the United States to overcome trade differences with Europe, which erupted again this week when U.S. President Donald Trump threatened to impose tariffs on $11 billion worth of European Union products, including commercial aircraft.

"I believe this is a matter of principle, it's not just about achieving some short-term economic gain. It's not about the art of the deal," Scholz said in reference to the best-selling business advice book credited to Trump.

IMF FUNDING

The Trump administration was also at odds with other IMF stakeholders on the need to boost the global lender's resources and update its governance.

Treasury Secretary Steven Mnuchin repeated the U.S. opposition to increasing overall funding and shareholding quotas, likely meaning the effort to lift IMF funding and reshuffle voting rights was a dead issue at this week's meetings.

The voting quotas were last altered nearly a decade ago.

"In our view, the IMF currently has ample resources to achieve its mission, and countries also have considerable complementary resources should a crisis emerge," Mnuchin said in a statement for the IMF's steering committee meeting that was posted on the IMF's website on Friday.

Without U.S. backing for an update to the IMF's stake-holding weights, there was little prospect for a change at this week's meetings.

"There is no majority in sight for any changes regarding IMF quotas," a German official said on condition of anonymity.

The IMF's last quota increase waRead More

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