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G20: Trade tensions have 'intensified'

June 9, 2019

G20 finance chiefs said trade and geopolitical tensions have intensified but did not express a pressing need to resolve them. They proposed pro-growth tax policies.

Bank of Japan Governor Haruhiko Kuroda and other participants prepare to attend the G20 finance ministers and central bank governors meeting, in Fukuoka
Image: Reuters/E. Hoshiko

Finance leaders from the Group of 20 (G20) ended a two-day meeting in the western Japanese city of Fukuoka on Sunday.

International Monetary Fund chief Christine Lagarde said trade tension was the "major" headwind facing the global economy, telling Japan's Nikkei daily it was a "significant risk on the horizon."

Japanese Finance Minister Taro Aso, hosting the talks, told reporters the world economy should "firm" in the second half of the year but "downside risks still remain."

Aso went on say "market confidence could be eroded" if China and the US did not resolve their ongoing trade war.

French Finance Minister Bruno Le Maire told Agence France-Presse there was a "real risk" that "this global economic slowdown could turn into a global economic crisis due to trade tensions."

"A worsening of the international climate and a real trade war would lead to an even more marked slowdown in global growth, with a direct impact on our jobs, companies, factories and sectors," he said.

Read more: Trade war 'hasn't made America great again,' says China

Finance statement

The finance chiefs in their final statement admitted the economic headwinds amid "intensified" trade tensions but expressed hope global growth should "pick up moderately later this year and into 2020."

They agreed to step up efforts to reform taxes "for a globally fair, sustainable, and modern international tax system, and welcome international cooperation to advance pro-growth tax policies."

They admitted that global current account imbalances may have "narrowed" since the 2008 financial crisis but "remain large and persistent."

They also advised major economies to tackle the topic of aging in relation to economic growth, encouraging women and older people into the labor market and promote "elderly-friendly industries." Tax systems should be designed to "better respond to the challenges posed by aging."

On cryptocurrencies, the G20 said they could "deliver significant benefits to the financial system and the broader economy," but that "while crypto-assets do not pose a threat to global financial stability at this point, we remain vigilant to risks."

aw/jm (AFP, Reuters, AP)

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