Background for the G20 deputies meeting in Shanghai

Reading Time:

Global Prospects and Policy Challenges: G-20 Finance Ministers and Central Bank Governors’ Meetings:

The global recovery has weakened further amid increasing financial turbulence and falling asset prices. Activity softened towards the end of 2015 and the valuation of risky assets has dropped sharply, especially in advanced economies, increasing the likelihood of a further weakening of the outlook. Growth in advanced economies is modest already under the baseline, as low demand in some countries and a broad-based weakening of potential growth continue to hold back the recovery. Adding to these headwinds are concerns about the global impact of China’s transition to more balanced growth, along with signs of distress in other large emerging markets, including from falling commodity prices. Heightened risk aversion has triggered global equity market declines and brought a further tightening of external financial conditions for emerging economies. Strong policy responses both at national and multilateral levels are needed to contain risks and propel the global economy to a more prosperous path.

Global Finance Leaders Meet as Economic Skies Darken - The New York Times: "Finance ministers and central bank governors from the world’s biggest industrialized and developing economies now arriving in Shanghai face their toughest task since the worst days of the global financial crisis. Europe is mired in low growth and Japan is teetering on the brink of recession, even though the Bank of Japan and a lengthening list of European central banks are pushing interest rates ever deeper into negative territory."

IMF calls on G20 to take ‘bold’ action -

OECD Calls for Urgent Increase in Government Spending

G20 nations face slowing global growth in China meeting - Yahoo News: "Friday's meeting will set the stage for a more high-profile G20 leaders summit hosted by Chinese President Xi Jinping on September 4-5 that will include US President Barack Obama, which is envisioned as one of the highlights of Xi's administration. China has become more aggressive in the political and economic spheres under his leadership, and the Beijing-led Asian Infrastructure Investment Bank (AIIB), viewed by some as a rival to the World Bank, started operations last month."

China Hopes to Calm Jitters About Its Economy at G-20 Meeting

U.S. to push for greater fiscal spending at G20

Chinese leadership vows stable macro economic policies to sustain growth - Business - "China's top leadership on Monday pledged that it would stabilize and improve macro policies to create an amicable environment for economic growth and ongoing structural reforms."

G-20 Leaders Are Fighting for a Better Financial Safety Net - Bloomberg Business

Among the topics for discussion will be how to coordinate existing resources, such as individual countries’ foreign-exchange reserves, regional emergency-funding agreements, central bank swap lines and the International Monetary Fund to fight any economic crisis, the officials said, asking not to be named because details of the meeting’s agenda haven’t been publicly announced.
Focus on the Feb. 26-27 gathering has risen amid the global sell-off in stocks this year and a surge in currency volatility that’s spurred calls from some quarters for policy coordination among the biggest economies.

G-20 Needs to Take Bold Action on Global Growth, IMF Report Says - Bloomberg Business: "The main risks to the global economy include persistent market turbulence in advanced economies, tighter financial conditions in emerging markets, a sharper-than-expected slowdown in China and further drops in oil prices, the IMF said."

OECD - Unsatisfactory global growth: A call to policy action, Catherine L. Mann: "OECD governments have more fiscal space than they did in the immediate post-crisis period. The sovereign debt crisis has faded and the most severe banking problems have been addressed. Budget deficits have fallen in many countries following budgetary consolidation and falling interest costs. The long-term interest rate is far lower than it was 3-years ago with negative interest rates on government borrowing of a few years and the ability to raise money at longer horizons at a minimal cost."

Martin Wolf: Helicopter drops might not be far away

China seeks to reassure trading partners on FX, markets ahead of G20 | Reuters

Can China Revive the G20? | The National Interest Blog

China Gives Glimpse of Its Solutions to Economic Problems - The New York Times: "Prime Minister Li Keqiang would unveil a government budget early next month that would include economic stimulus through an increase in deficit spending, which was only 2.3 percent of economic output last year."

Britain pushes G20 to warn against exit from EU - "The chancellor’s drive to include a warning about Brexit in the official G20 finance ministers and central bank governors’ communiqué tomorrow underlines how seriously the government is taking the early stages of the campaign for the June 23 EU referendum, compared with its slower start in the 2014 vote on Scottish independence."

February 14: Transcript of Governor Zhou Xiaochuan’s Exclusive Interview with Caixin Weekly

The Brexit gamble: An adventure in market volatility

After the summit The Economist: "But nothing will matter as much as Mr Cameron's standing. Believe it or not, voters are not terribly interested in...

The global fiscal stance (interactive chart)

I thank my Peterson Institute colleagues Caroline Freund and Paolo Mauro for the idea to calculate the global fiscal stance....