IMF's Lagarde, G20 finance VIPs urge action on reforms

SHANGHAI - Officials at a global finance meeting Friday in Shanghai urged governments to speed up promised job-creating reforms instead of relying on stimulus to perk up slackening growth.

See Full Article

Governments have tried to squelch expectations the Group of 20 gathering of finance ministers and central bankers from the United States, China, Japan, Germany and other major rich and emerging economies will produce specific growth plans. But they face pressure to reassure nervous financial markets.

Christine Lagarde, the managing director of the International Monetary Fund, said governments should act faster on reforms promised at a G-20 meeting in 2014. That list included some 800 commitments meant to simplify regulations and boost trade, investment and technology development, but many have yet to be carried out.

"Policymakers do not need to invent yet another trick, but they need to deliver steadily on the commitments they have made," Lagarde said at an event organized by the Washington-based Institute of International Finance alongside the Shanghai meeting.

Referring to monetary and fiscal policy and structural reforms, Lagarde said, "There has to be action on all fronts."

Others at the meeting include U.S. Treasury Secretary Jacob Lew and Federal Reserve Chairwoman Janet Yellen; China's finance minister, Lou Jiwei, and central bank governor, Zhou Xiaochuan; Mario Draghi of the European Central Bank and their counterparts from Europe, South Korea, India and South Africa.

Global growth is at its lowest in two years and forecasters say the danger of recession is rising. The IMF cut this year's global growth forecast by 0.2 percentage points last month to 3.4 per cent. It said another downgrade is likely in April.

Central banks still have room to use interest rate cuts and other stimulus but need governments to follow through with promised economic changes, said Mark Carney, head of the Bank of England.

"Global growth has disappointed because the innovation and ambition of global monetary policy has not been matched by structural measures," said Carney at the IIF event. "In most advanced economies, difficult structural reforms have been deferred."

Germany's finance minister, Wolfgang Schauble, said fiscal stimulus has "reached its limit" and his government will not agree to more co-ordinated spending in the event of further deterioration in the global economy. He urged other countries to deliver on reforms instead.

"We are not lacking in policy proposals," he said. "We are lacking in policy implementation."

Also Friday, China's central bank chief promised to avoid weakening its yuan to boost sagging exports as he tried to reassure nervous financial markets about his government's handling of its economy and currency.

The Chinese hosts hoped to use the meeting to promote their campaign for a bigger voice in managing global trade and finance. Instead, the communist government is scrambling to defend its reputation for economic competence following stock market and currency turmoil.

A key worry, despite repeated Chinese denials, is that Beijing will allow its yuan to decline to support struggling exporters. That expectation has driven an outflow of capital from China that spiked to a record $135 billion in December.

"We will not resort to competitive depreciation to boost our advantage in exports," said Zhou Xiaochuan, governor of the People's Bank of China, at a news conference.

Zhou said the meeting should focus on global demand, economic reforms and promoting "sustainable and balanced" growth.

The foreign view of China's economic health was shaken last year by a stock market collapse that wiped out $5 trillion in paper wealth. Its main market index fell by an unusually large daily margin of 6.4 per cent on Thursday but gained almost 1 per cent on Friday.

At the G-20 opening ceremony, Zhou tried to reassure his audience the Chinese economy is robust after growth slowed to a 25-year low of 7.3 per cent last year. He noted that it still was among the world's strongest performances.

"China's economic fundamentals remain strong and supportive of growth," he said. "The Chinese economy will continue to grow at a moderate-to-high pace."

-----

AP Business Writer Joe McDonald and researcher Dong Tongjian in Beijing and AP Writer Erika Kinetz in Shanghai contributed.



Advertisements

Latest Economic News

  • DavidsTea swings to loss on charges but says e-commerce improving

    Economic CTV News
    MONTREAL - DavidsTea Inc. says it swung to a loss in its last quarter as onerous contract charges and impairments weighed on its balance sheet. The specialty tea retailer says it had a loss of $16.1 million for the fourth quarter ending Feb. Source
  • Rogers profit rises by more than a third to $425M

    Economic CBC News
    Rogers Communications Inc. reported a $425 million net profit in its first quarter, up 37 per cent from $310 million in the comparable period last year. The wireless, cable, internet and media company's adjusted earnings grew even more, rising by 45 per cent to $477 million under new accounting rules that Rogers began using in the quarter ended March 31. Source
  • Ottawa's new privacy rules give businesses flexibility on reporting data breaches

    Economic CTV News
    OTTAWA -- Federal data breach regulations set to take effect Nov. 1 will require mandatory reporting of security breaches that pose a "real risk of significant harm," but give businesses flexibility about how that's done. Source
  • Spat breaks out between Tim Hortons franchisee factions over public complaints

    Economic CBC News
    The Tim Hortons franchisee advisory board is slamming a group representing at least half of the brand's restaurant owners for publicly making complaints about their parent company Restaurant Brands International Inc. In a letter to franchisees obtained by The Canadian Press, the board argues that the comments by the Great White North Franchisee Association criticizing the company in the media and to the federal government is corrosive and damaging to the Tim Hortons brand. Source
  • Acacia Mining production drops 45 per cent as Tanzania troubles persist

    Economic CTV News
    TORONTO -- A subsidiary of Toronto-based Barrick Gold Corp. says gold production at its Tanzanian operations plunged 45 per cent last quarter as it grappled with export restrictions from the country. London-based miner Acacia Mining, owned 64 per cent by Barrick, says the drop in production resulted from reduced operations at its Bulyanhulu mine and producing mostly from lower-grade stockpiles at its Buzwagi mine. Source
  • Supreme Court beer ruling could apply to Alberta-B.C. pipeline war, experts say

    Economic CTV News
    CALGARY -- A Supreme Court of Canada ruling on bringing beer from Quebec into New Brunswick has implications for the trade war between Alberta and B.C. over the Trans Mountain pipeline expansion. Experts say the court seems to be addressing the issue in its decision when it notes that while some trade barriers can be allowed in some circumstances, those designed to punish another province or to protect a local industry would not be permissible. Source
  • High cost of dental services prompting some patients to seek alternative options

    Economic CBC News
    An unaffordable price tag kept Melanie Laxson out of the dentist's chair until the pain became unbearable. With no access to insurance, the 38-year-old says there's no way she could afford the full cost of a dentist. Source
  • Canadian airline profits will fall in 2018 on higher costs: Conference Board

    Economic CTV News
    MONTREAL - The Conference Board of Canada says the growth of the country's airline industry will slow in 2018 as profits are forecast to decrease from last year's peak primarily because of higher fuel and labour prices. Source
  • Commodities volatile on $100 US oil talk

    Economic CBC News
    Talk that Saudi Arabia has its sights on $80-$100 US a barrel oil again and of more U.S. sanctions on Russia ignited a rally in commodities and resource stocks on Thursday, though the potential boost to inflation hit fixed-income assets. Source
  • Commodities rollercoaster on $100 US oil talk, sanctions stress

    Economic CBC News
    Talk that Saudi Arabia has its sights on $80-$100 US a barrel oil again and of more U.S. sanctions on Russia ignited a rally in commodities and resource stocks on Thursday, though the potential boost to inflation hit fixed-income assets. Source