ANKARA: Warily watching economic clouds gathering in China and the possibility of an end to zero interest rates in the United States, G20 leaders steered a careful course at their meeting in Turkey at a time of uneven and fragile growth.
The two-day gathering in the Turkish capital Ankara came less then a month after China shocked financial markets with a surprise devaluation of its currency, triggering global jitters about declining growth and slumping stocks in the world’s second-largest economy.
Meanwhile, what global recovery there is remains desperately uneven across the G20, with the United States picking up pace while Europe is only now emerging from crisis, and top emerging markets like Russia and Brazil are mired in recession.
“The major challenge facing the global economy is that growth remains moderate and uneven,” said International Monetary Fund (IMF) managing director Christine Lagarde.
“The current economic situation is characterized by the word uncertainty,” she said.
The final G20 communique unsurprisingly stayed clear of any specific mention of China. But, in a clear nudge to Beijing, it also urged states to avoid competitive currency devaluations that would give an unfair advantage to domestic exporters.
It also did not make any direct reference to the US Federal Reserve, with economists warning a lift-off interest rate rise at its meeting in September could deal a body blow to vulnerable emerging markets.
But the statement appeared to acknowledge a Fed rate rise could be on the cards at some point, saying that “in line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies.”
Lagarde said there was an “extremely broad and in-depth discussion” of the Fed’s policies. She urged the US central bank to make the move when there was “no uncertainty.”
‘Recovery to gain speed’
The communique acknowledged the fragility of the recovery, saying “global growth falls short of our expectations.”
The IMF has said in its latest world economic outlook that it expects global growth to be 3.3 percent in 2015 and expand to 3.8 percent in 2016—forecasts Lagarde said would have to be pruned further.
But the ministers and central bank chiefs said they were confident “the global economic recovery will gain speed”, vowing to carefully calibrate economic and monetary policies in the pursuit of this goal.
Deputy Turkish Prime Minister Cevdet Yilmaz, who chaired the meeting, said “we are aware of the risks and challenges ahead of us.”
“The world needs better cooperation of the chief players.”