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G20: Trade is key engine of economic growth

By on July 23, 2018

SAN JUAN – Amid global trade tensions, the third G20 meeting of finance ministers and central bank governors in Buenos Aires, Argentina, over the weekend reflected the support of the world’s main economies of international trade and investment as “important engines of growth, productivity, innovation, job creation and development,” according to the issued communiqué.

In the forum for the governments and central bank governors of Argentina (the current chair), Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union, more than 55 senior officials discussed the “risks and opportunities” of the world economy over a two-day meeting at the Buenos Aires Convention & Exhibition Centre (CEC).

The document, agreed by all G20 member countries, reads that “global economic growth remains robust and unemployment is at a decade low.” However, it warns there are “downside risks over the short and medium term.” These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances and inequality.

It adds that “although many emerging market economies are now better prepared to adjust to changing external conditions, they still face challenges including market volatility and reversal of capital flows.”

The 57 delegates, including ministers, central bank governors and senior representatives from international organizations, agreed to continue “using all policy tools to support strong, sustainable, balanced and inclusive growth.” Among these tools, the communiqué mentions fiscal measures and monetary policy, the continued implementation of structural reforms, and international trade and investment, according to a release by the G20.

“The G20 meeting of Finance Ministers and Central Bank Governors took place against the backdrop of continued strong but more uneven global growth. Indeed, the world economy is facing increasing risks, especially in the short term, from rising trade tensions, financial pressures in vulnerable emerging economies, and the return of sovereign risk in parts of the euro area,” Christine Lagarde, managing director of the International Monetary Fund (IMF), said in a statement after the meetings.

She reiterated that “trade conflicts be resolved via international cooperation without resort to exceptional measures.”

U.S. Treasury Secretary Steven Mnuchin disputed that protectionism is the issue, the Associated Press reports.

“People are trying to make this about the United States and protectionism. That’s not the case at all,” the AP quoted him as saying at a news conference. “This is about the United States wanting fair and free trade. … We very much support the idea that trade is important for the global economy, but it’s got to be on fair and reciprocal terms.”

On right, U.S Treasury Secretary Steven Mnuchin (Courtesy)

The meeting participants included 23 finance ministers, 14 central bank governors and 10 representatives from international organizations. Besides Argentine Minister of the Treasury Nicolás Dujovne, Argentine Central Bank President Luis Caputo, Secretary Mnuchin and the IMF’s Lagarde, these included Jim Yong Kim, president of the World Bank Group; José Ángel Gurría, secretary-general of the Organization for Economic Cooperation and Development; Luis Alberto Moreno, president of the Inter-American Development Bank; Mario Draghi, president of the European Central Bank; Liu Kun, China’s minister of finance; and Philip Hammond, UK chancellor of the Exchequer.

Read the G20’s full communiqué here.

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