U.S. Treasury Secretary Jack Lew said that G20 finance officials do not need to take the same type of massive coordinated fiscal stimulus efforts used to combat recession in 2008-2009, despite an expected global economic growth slowdown sparked by Britain’s vote to leave the European Union.
Lew, speaking to reporters before flying to Chengdu, China for a G20 finance ministers and central bank governors meeting this weekend, said that member countries needed to take actions to support growth that are appropriate for their circumstances, including fiscal and monetary actions and structural reforms aimed at boosting efficiency.
“I don’t think this is a moment which calls for the kind of coordinated action that, say, the Great Recession did in 2008 and 2009,” Lew told reporters in Athens. “It really is a moment of cautionary – we each need to do what we can to ensure that where growth is soft it gets stronger, and prospects for the medium- and long-term are improved.”
Lew said that G20 members are now firmly focussed on boosting economic growth, unlike during the past three years, when some member countries pressed for more fiscal austerity.
“Three years ago, there was a vibrant debate at the G20 meetings between growth and austerity. It was a choice. The austerity arguments have pretty much subsided. The question now is, how do you achieve effective growth.”
The International Monetary Fund this week cut its global growth forecasts for the fifth time in 15 months because of the UK “Brexit” vote, saying that uncertainty over Britain’s future trade relationship with Europe will stall investment and sap consumer confidence.
The IMF said on Thursday said that G20 members should agree on broad-based efforts to support consumer demand, limit private sector debt, and reform business and labour markets. The fallout from the Brexit decision is expected to dominate discussions among officials at the G20 meeting in Chengdu. Lew said the best outcome for the British-EU divorce negotiations is for a deal that “maximizes the integration of the UK and Europe.”
He said the process is likely to drag on well beyond weeks or months, and said he hoped to see the discussion “characterized by amicable, pragmatic engagement where the focus is on maximizing integration and cooperation.”
Source: Reuters (Reporting by David Lawder; Editing by Chizu Nomiyama)