Global leaders eye ‘modest rebound’

Bank of England chief Mark Carney speaks at a meeting of IMF and World Bank leaders in Washington. A slowdown in growth is damaging attempts to fight global poverty, the forum was told. (Reuters)
Updated 19 October 2019

Global leaders eye ‘modest rebound’

  • Trade wars dominate discussions among G20 nations as Saudi Arabia begins preparations to chair the group in 2020

WASHINGTON: The world’s finance leaders agree that growth has slowed, but they remain hopeful for a modest rebound next year as long as trade and geopolitical tensions do not worsen.

That was the assessment from finance ministers and central bank governors of the Group of 20 major industrial countries.

Those officials met ahead of discussions on Saturday with the policy-setting panels of the 189-nation International Monetary Fund and the its sister lending organization, the World Bank.

The leaders of those two organizations appealed to their member countries on to resolve the widening disagreements on trade, climate change and other issues, warning that the continued diversions threatened to worsen the current global slowdown.

Japanese Finance Minister Taro Aso, the current chair of the G20 finance group, said that while current conditions are less than optimal, there was still hope that conditions will improve.

Speaking after the G20 discussions ended, Aso said: “We broadly agreed that the global economic expansion continues, but its pace remains weak.”

Aso said the group felt that the risks remained weighted to the downside with the major threats coming from trade wars and geopolitical tensions. But he said the expectation was that growth would pick up in 2020.

Japan served as chair of the G20 this year, a position that will be taken by Saudi Arabia in 2020.

The US is represented at the meetings by Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.

The IMF in its updated economic outlook prepared for this week’s meetings projected the global economy would expand by just 3 percent this year, the weakest showing in a decade, with 90 percent of the globe experiencing a downshift in growth this year. But it is forecasting growth will accelerate slightly to 3.4 percent in 2020, still below the 3.6 percent global growth seen in 2018.

“Trade tensions are now taking a toll on business confidence and investment,” IMF Managing Director Kristalina Georgieva said in an opening speech to finance officials on Friday.

Georgieva, a Bulgarian economist who had been the No. 2 official at the World Bank, recognized the accomplishments of her IMF predecessor, Christine Lagarde, the first woman to head that agency. Lagarde was in the audience for the speech.

“As someone who grew up behind the Iron Curtain, I could never have expected to lead the IMF,” Georgieva said. She noted she had witnessed the devastation of bad economic policies when her mother lost 98 percent of her life savings during a period of hyperinflation in the 1990s in Bulgaria.

World Bank President David Malpass said the slowdown in global growth was hurting efforts to help the 700 million people around the world living in extreme poverty, especially in nations trying to cope with a flood of refugees from regional conflicts.

“Many countries are facing fragility, conflict and violence, making development even more urgent and difficult,” he said.

The fall meetings of the IMF and World Bank meetings were expected to be dominated by the trade disputes triggered by the Trump administration’s get-tough policies aimed at lowering America’s huge trade deficits and boosting US manufacturing jobs. So far, those efforts have made little headway.

In addition to the battle between the US and China, higher US tariffs went into effect Friday on $7.5 billion in European goods coming into the US in a dispute involving airplane subsidies.

Bruno Le Maire, France’s finance minister, said that China probably would be the real winner in the US-EU trade fight. He said the EU was ready to negotiate a settlement to avoid the tariffs but so far, the Trump administration has rejected those efforts.

“From the beginning, we have made it clear that we want to avoid a trade war,” Le Maire said. “The response from the US administration has been a closed door.”

Georgieva said a tentative US-China trade agreement announced last week should lessen the damage to the global economy slightly, but solid global growth would not return until the two countries resolved their differences and all countries moved to modernize the rules of global trade to lessen future disputes.


Oil retreats in face of renewed coronavirus uncertainty

Updated 22 February 2020

Oil retreats in face of renewed coronavirus uncertainty

  • G20 finance leaders to meet in Saudi Arabia at the weekend to discuss risks to the global economy
  • OPEC+ has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs

LONDON: Oil prices fell on Friday as weak Asian data and a rise in new coronavirus cases fuelled uncertainty about the economic outlook while leading crude producers appeared to be in no rush to curb output.

Brent crude was down $1.56, or 2.6 percent, at $57.75 in afternoon trade, while U.S. crude dropped $1.25, or 2.3 percent, to $52.63.

"With Brent failing to breach the $60 level on Thursday despite better than expected U.S. oil inventory data, rising market uncertainty is dragging down oil prices on Friday," said UBS analyst Giovanni Staunovo.

"Market participants who benefited from the price rise in recent days might prefer not to go into the weekend with a long position."

 

China reports rise in coronavirus cases.

Japan factory activity shrinks at fastest pace since 2012.

Russia says early OPEC+ meeting no longer makes sense.

Finance leaders from the Group of 20 major economies meet in Saudi Arabia at the weekend to discuss risks to the global economy after new Asian economic and health data kept investors on guard.

Beijing reported an uptick in coronavirus cases on Friday and South Korea reported 100 new cases, doubling its infections. In Japan, meanwhile, more than 80 people have tested positive for the virus.

Factory activity in Japan registered its steepest contraction in seven years in February, hurt by fallout from the outbreak. 

"We still believe that the market is likely to trade lower from current levels, given the scale of the surplus over the first half of this year, and the need for the market to send a signal to OPEC+ that they must take further action at their meeting in early March," said ING analyst Warren Patterson.

Russian Energy Minister Alexander Novak said on Thursday that global oil producers understood it would no longer make sense for the Organization of the Petroleum Exporting Countries and its allies to meet before the planned gathering.

The group, known as OPEC+, has been withholding supply to support prices and many analysts expect an extension or deepening of the curbs.