Japan Warns G-20 That Global Economy Still Faces Downside Risks

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Japan kicked off its G-20 presidency by reminding the world that the global economy isn’t out of the woods yet.

“The extension of global growth continues but at a slower pace than anticipated in October,” Finance Minister Taro Aso said in a press conference wrapping up the gathering of Group of 20 finance ministers and central bank governors in Washington Friday. “The balance of risk remains skewed to the downside.”

Japan took on the G-20 presidency for the first time this year, and seeks to reach concrete agreements over its various agendas -- ranging from new frameworks for international taxation to addressing global trade imbalances -- in meetings to be held in the country in June.

While all 20 member states agreed with the International Monetary Fund’s view that global growth may pick up in the second half of 2019, Japan noted the heightened uncertainties across the world.

“We must also be mindful of the possibility of any escalation of trade tensions, policy uncertainty and geopolitical risk and the sudden, sharp tightening of the financial conditions against the backdrop of elevated financial vulnerabilities,” Aso said.

One risk was at least deferred this week when the U.K. avoided crashing out of the European Union, but trade talks between the U.S. and a slowing China have yet to be resolved. And Japan faces looming discussions of its own with the Trump administration after two years of trying to avoid bilateral negotiations.

Bank of Japan Governor Haruhiko Kuroda said there was a consensus among members that a “timely policy response” will be necessary if more hazards materialize.

“There continue to be major risks to the outlook, and there are high levels of uncertainties surrounding policy, including over trade tensions,” said Kuroda. “There is the risk that the global economy could worsen another notch through a worsening of corporate mindsets.”

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