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.