Japan warns G-20 of downside risks to global economy

TOKYO • Japan kicked off its Group of 20 (G-20) presidency by reminding the world that the global economy isn’t out of the woods yet.

“The extension of global growth continues, but at a slower pace than anticipated in October,” Finance Minister Taro Aso said at a press conference after the gathering of G-20 finance ministers and central bank governors in Washington last Friday. “The balance of risk remains skewed to the downside.”

Japan took on the G-20 presidency for the first time this year, and seeks to reach concrete agreements over its various agendas — ranging from new frameworks for international taxation, to addressing global trade imbalances — in meetings to be held in the country in June.

While all 20 member states agreed with the International Monetary Fund’s view that global growth may pick up in the second half of 2019, Japan noted the heightened uncertainties across the world.

“We must also be mindful of the possibility of any escalation of trade tensions, policy uncertainty and geopolitical risk and the sudden, sharp tightening of the financial conditions against the backdrop of elevated financial vulnerabilities,” Aso said.

One risk was at least deferred last week when the UK avoided crashing out of the European Union, but trade talks between the US and a slowing China have yet to be resolved.

Also, Japan faces looming discussions of its own with the Trump administration after two years of trying to avoid bilateral negotiations.

Bank of Japan governor Haruhiko Kuroda said there is a consensus among members that a “timely policy response” will be necessary, if more hazards materialise.

“There continue to be major risks to the outlook, and there are high levels of uncertainties surrounding policy, including over trade tensions,” said Kuroda.

“There is the risk that the global economy could worsen another notch through a worsening of corporate mindsets.” — Bloomberg