Daily Management Review

Amidst Japan’s Warning of a Global Crisis, G7 Vows Economic Growth Efforts


Amidst Japan’s Warning of a Global Crisis, G7 Vows Economic Growth Efforts
While papering over differences on currencies and stimulus policies and expressing concern over North Korea, Russia and maritime disputes involving China, the Group of Seven industrial powers pledged on Friday to seek strong global growth.
The summit attended by the top leaders of the G7 countries wrapped up the meetings with vow to use "all policy tools" to boost demand and ease supply constraints.
"Global growth remains moderate and below potential, while risks of weak growth persist. Global growth is our urgent priority," they said in a declaration.
Britain, Canada, France, Germany, Italy, Japan and the United States make up the G7 countries.
The G7 "shares a strong sense of crisis" about the global outlook, said the Japanese Prime Minister Shinzo Abe, talking up what he calls parallels to the global financial crisis that followed the 2008 Lehman Brothers bankruptcy.
"The most worrisome risk is a contraction of the global economy," led by a slowdown in emerging economies, Abe told a news conference after chairing the two-day summit. "There is a risk of the global economy falling into crisis if appropriate policy responses are not made," he said.
The G7 committed to avoiding "competitive devaluation" of their currencies, while warning against wild exchange-rate moves and sticking to market-based exchange rates in the broad-ranging, 32-page declaration.
The positions of the United States, which generally opposes market intervention and that of Japan, which has threatened to intervene to block sharp yen rises were both compromised in the declaration.
While considering each country's circumstances into account, while continuing efforts to put public debt on a sustainable path, the G7 vowed "a more forceful and balanced policy mix" to "achieve a strong, sustainable and balanced growth pattern".
While German Chancellor Angela Merkel has been sceptical about public spending to boost growth, Abe has stressed the need for flexible fiscal policy to sustain economic recovery.
The global industrial overcapacity, especially in steel was described as a "pressing structural challenge with global implications" by the G7.

The G7 said that Britain’s an exit from the EU "would be a serious risk to global growth" while referring to Britain's referendum next month on whether to leave the European Union.
Though their statement did not single out China, which produces half of the world's steel and is blamed by many countries for flooding markets with cheap steel, the leaders pledged to tackle a global glut in steel.
"Further restrictive measures" to raise the costs on Moscow were threatened by the group in protest against the Russia's "illegal annexation" of the Crimean peninsula from Ukraine. However they said that if Russia implemented previous agreements and respected Ukraine's sovereignty, sanctions could be rolled back.
Amid territorial disputes with Japan and several Southeast Asian nations, China has been taking more assertive action in East and South China Seas and the G7 expressed concern over the issue.
The G7 reiterated its commitment to respecting the freedom of navigation and overflight and to the peaceful settlement of maritime disputes. Beijing was not named in the statement. The group called for countries "to settle disputes by peaceful means" and to refrain from "unilateral actions which could increase tensions".

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