(Bloomberg) -- Group of Seven finance chiefs acknowledged gathering threats to the global economy and gave a cautious pledge to provide fiscal support if those dangers materialize.
After a two-day meeting in Chantilly, France, finance ministers and central bankers declared risks for the global economy remain “tilted to the downside,” even if growth is stabilizing and there should be a moderate pickup next year. That’s a later timeline for improvement than envisioned at the Group of 20 summit in Osaka last month.
“Fiscal policy should be flexible and growth-friendly, while rebuilding buffers where needed,” according to a summary of the talks prepared by the French G-7 presidency. “Monetary policy will continue to support economic activity, while remaining mindful of financial stability and recognizing that monetary policy alone cannot address all economic challenges.”
The focus on flexibility for governments and limits for central banks echoes a drumbeat in favor of loosening the purse strings in major economies. After years of expansive policy, monetary authorities have lost ammunition, while persistent trade tensions are threatening to weaken momentum further.
European Woes
Europe is suffering from a more marked slowdown as the U.S. economy is supported by a significant budget deficit, Bank of France Governor Francois Villeroy de Galhau said. Within Europe, countries exposed to a trade slowdown are lagging even more.
“Confronted with this slowdown, central banks are doing their job,” Villeroy said to BFM Business radio. “They can’t do everything, that is one of the important messages.”
Finance chiefs avoided having to responding to President Donald Trump’s complaints about the strong dollar and his suggestion that other countries may be strategically weakening currencies. In the summary of proceedings in Chantilly, they simply reiterated commitments previously made on exchange rates, with the aim to support global growth.
More Highlights From the G-7 Meeting:
- G-7 finance chiefs found common ground on concerns over Facebook’s Libra and their will to block the project if needed.
“Stablecoins and other various new products currently being developed, including projects with global and potentially systemic footprint such as Libra, raise serious regulatory and systemic concerns, as well as wider policy issues, which both need to be addressed before such projects can be implemented.”
- On digital taxation, after a clash between the U.S. and France, the G-7 agreed the Organization for Economic Cooperation and Development should “further reflect’’ on the matter.
- Finance chiefs also agreed on a coordinated approach to cyber security risks and to establish a program of exercises in the coming years, similar to the crisis simulation the G-7 conducted in June.