RIYADH (Reuters) – Finance leaders of the world’s top 20 economies expect economic growth to pick up modestly this year and next thanks to loose monetary policy and an easing of trade tensions, and vowed to monitor the effects of the coronavirus outbreak.
U.S. Treasury Secretary Steven Mnuchin arrives for a welcome dinner at Saudi Arabia Murabba Palace, during the G20 meeting of finance ministers and central bank governors in Riyadh, Saudi Arabia February 22, 2020. REUTERS/Ahmed Yosri
The Group of 20 (G20) finance ministers and central bank heads faced a sober presentation by the International Monetary Fund (IMF), which predicted the epidemic would shave 0.1 percentage points off global growth.
“Global growth is expected to pick up modestly in 2020 and 2021. The recovery is supported by the continuation of accommodative financial conditions and some signs of easing trade tensions,” the communique from the financial leaders said.
“We will enhance global risk monitoring, including of the recent outbreak of COVID-19. We stand ready to take further action to address these risks,” the statement said, using the medical acronym for the disease caused by the new coronavirus.
As the delegates wrapped up their meeting, Chinese President Xi Jinping was quoted as saying that Beijing would step up policy adjustments to help cushion the blow on the economy from the outbreak.
“The outbreak of novel coronavirus pneumonia will inevitably have a relatively big impact on the economy and society,” Xi said, adding the impact would be short-term and controllable.
China was represented at the G20 meeting by its ambassador to Saudi Arabia, as senior officials stayed away due to the growing crisis over the virus.
“We have discussed the outbreak of coronavirus in China and other countries and all the G20 countries agreed collectively on being ready to intervene with necessary policies,” Saudi Finance Minister Mohammed al-Jadaan told a news conference.
The epidemic, which originated in China, has since spread to nearly 30 countries and territories.
South Korea raised its infectious disease alert to its highest level on Sunday, while a third passenger from a virus-infected cruise ship in Japan died.
“In our current baseline scenario, announced policies are implemented and China’s economy would return to normal in the second quarter. As a result, the impact on the world economy would be relatively minor and short-lived,” IMF Managing Director Kristalina Georgieva said on Saturday.
“But we are also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences are more protracted,” she added.
The ministers and central bankers also encouraged further work by the Organisation for Economic Cooperation and Development (OECD) on global rules to tax digital giants like Google, Amazon and Facebook.
The OECD, the G20’s think-tank, is to prepare technical assumptions by July that would allow governments to tax digital companies where they do business, rather than where they are registered for tax purposes.
A final agreement on the global rules is to be ready by the end of this year to avoid a proliferation of different digital tax regimes all over the world.
Key to the deal is the cooperation of the United States, which has been stalling progress unsure of the deal’s political impact in a presidential election year.
Reporting by Leika Kihara; Editing by Alex Richardson