SHANGHAI (AP) — Finance officials of the world’s biggest economies promised Saturday to use “all tools” to shore up sagging global growth and to avoid devaluing their currencies to boost exports, but made no pledges of joint action.
Finance ministers and central bankers of the Group of 20 rich and developing countries tried to reassure jittery financial markets that the global economy is healthy, though they acknowledged in a statement that they “need to do more” to boost growth.
The declaration following a two-day meeting promised “growth-friendly” tax and spending policies. The governments pledged to press ahead with previously promised reforms aimed at making their economies more efficient and productive.
“We agreed to use all tools — monetary, fiscal and structural — to boost growth,” China’s finance minister, Lou Jiwei, said at a news conference.
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What each country does will be dictated by its circumstances, Lou said. He said some can afford stimulus while others where debt is high have to move faster on structural economic reforms.
Companies and investors were looking to the Shanghai meeting for reassurance and action. But leaders from the United States, China, Europe and elsewhere had tried to squelch expectations that it would produce specific growth plans.
Global growth is at its lowest in two years and forecasters say the danger of recession is rising. The International Monetary Fund cut this year’s global growth forecast by 0.2 percentage points last month to 3.4 percent. It said another downgrade is likely in April.
The G-20 statement acknowledged that “vulnerabilities have risen” in the global economy against a backdrop that includes volatile capital flows, the European refugee crisis and the possibility of a British exit from the European Union. But it said that growth should continue at a “moderate pace” in advanced economies and “remains strong” in developing countries.
The governments promised to avoid “competitive devaluations” of their currencies to boost exports — a key concern of global markets following turmoil over China’s yuan.
A surprise change in August in the mechanism Beijing uses to set its exchange rate prompted fears that the yuan might be weakened to support struggling Chinese exporters. Despite official denials, repeated Friday by Chinese central bank governor Zhou Xiaochuan, those expectations have driven an outflow of capital that spiked to a record $135 billion in December.
“We will not target our exchange rates for competitive purposes,” the G-20 statement said.
The Chinese hosts wanted the meeting to promote their campaign for a bigger voice in managing trade and finance. Instead, the communist government had to scramble to defend its reputation for competence following stock market and currency turmoil.
In a video message Friday to the meeting, China’s top economic official, Premier Li Keqiang, said Beijing had the resources to combat downward pressure on growth that fell to a 25-year low of 7.3 percent last year.
“The Chinese economy has great potential, resilience and flexibility, and we will capitalize on such strengths,” Li said.
A repeated theme from officials was that governments need to speed up economic reforms because multiple rounds of stimulus by central banks and treasuries used since the 2008 global crisis are no longer effective.
A previous G-20 meeting in Australia produced a list of some 800 promised reforms aimed at simplifying regulation and boosting trade, technology and job creation, but many have yet to be carried out.
On Friday, Germany’s finance minister, Wolfgang Schauble, said his government would refuse to take part in any new joint stimulus in the event of falling global growth. He insisted governments had to embrace reforms instead.
Others at the meeting included U.S. Federal Reserve Chairwoman Janet Yellen, Mario Draghi of the European Central Bank and their counterparts from Europe, South Korea, India and South Africa.
U.S. Treasury Secretary Jacob Lew welcomed the agreement to avoid devaluations and urged governments to push ahead with reforms.
“We need to redouble our efforts to boost global demand, rather than relying on the United States as the consumer of last resort,” Lew said.
British Treasury chief George Osborne said the statement’s reference to unease over his country’s possible departure from the EU emphasized its potential consequences. The pound has hit seven-year lows as jittery investors react to uncertainty about the June 23 referendum on whether to remain in the 28-country bloc.
The Shanghai meeting concluded that 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.”
McDonald reported from Beijing.