Finance officials of the world’s 20 biggest economies meeting in Shanghai promised Saturday to use all policy tools available to promote global growth and avoid “competitive devaluations” of their currencies to boost exports.
At the end of a two-day conference in the Chinese business hub, finance ministers and heads of central banks in the Group of 20 (G20) issued a statement acknowledging that “vulnerabilities have risen” in the global economy, including volatile capital flows, the European refugee crisis and the possibility of a British exit from the European Union.
Moderate growth in advanced economies
The statement said that growth should continue at a “moderate pace” in advanced economies and “remains strong” in developing countries.
Speaking to reporters after the meeting, the U.S. Treasury Secretary Jack Lew welcomed the agreement to avoid the devaluation of currencies and urged governments to push ahead with reforms.
US Treasury Secretary Jacob Lew holds a press conference after sessions of the G20 Finance Ministers and Central Bank Governors Meeting at the Pudong Shangri-la Hotel in Shanghai, Feb. 27, 2016.
"We need to redouble our efforts to boost global demand, rather than rely on the United States as the consumer of first and last resort," he said. "It's also important that all G20 honor their commitments to refrain from competition devaluation and to not target exchange rates for competitive purposes."
International Monetary Fund Managing Director Christine Lagarde urged the group to take “collective” and “deliberate” actions to avoid a derailment of the economic recovery.
"Our conclusion, which I shared with the members of the G20, is that without collective deliberate action on the part of policy members, and implementation, there is a risk that the recovery could derail. So my sense is that there was in the room, a renewed sense of urgency, and a renewed sense for collective action," she said.
From left, Germany's Federal Bundesbank Jens Weidmann, IMF Managing Director Christine Lagarde, OECD Secretary-General Jose Angel Gurria and U.S. Federal Reserve Board Chair Janet Yellen take their seats for a family photo of G20 Finance Ministers and Central Bank Governors Meeting at the Pudong Shangri-la Hotel in Shanghai, Feb. 27, 2016.
Consequences of possible 'Brexit'
British Finance Minister George Osborne said that the G20 closing statement's reference to unease over Britain’s possible departure from the EU emphasized its potential consequences.
A possible vote to withdraw “is among the biggest economic dangers this year,” Osborne said. “If that's their assessment of the impact on the world economy, imagine what it would do to the U.K.”
A significant boost for Prime Minister David Cameron and Osborne, came when Lew expressed strong U.S. support for Britain's continued membership in the EU.
Meanwhile, on the sidelines of the G20 conference, officials of the BRICS group — Brazil, Russia, India, China and South Africa — signed an agreement Saturday to locate the headquarters of the New Development Bank (NDB) in Shanghai.