G7 to make global growth more inclusive

By   /  May 14, 2017  /  Comments Off on G7 to make global growth more inclusive

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MIL OSI China

Source: China State Council Information Office

Headline: G7 to make global growth more inclusive

Financial leaders from the Group of Seven (G7) members concluded their meeting in Italy on Saturday, pledging to ensure a more inclusive global growth.

Yet, they did not address the risks of protectionism, according to Italian officials.

The meeting drew finance ministers and central bank governors from the world’s seven most developed economies in the southern Italian city of Bari from Thursday to Saturday. It was a key prelude to a major G7 summit scheduled in the city of Taormina, Sicily, on May 26-27. Italy, which holds the G7’s rotating presidency this year, pushed to make inclusive growth and economic inequalities a key topic.

“Global recovery is gaining momentum, yet growth remains moderate and GDP is still below potential in many countries, with the balance of risks tilted to the downside,” the leaders said in a final communique.

“Against this backdrop… we remain determined to use all policy tools — monetary, fiscal, and structural — to achieve our goal of strong, sustainable, balanced, and inclusive growth.”

The financial officials endorsed a specific manifesto — the Bari Policy Agenda — on the issue.

“The document sums up the fruits of a relevant work carried out in the last months,” Italian Finance Minister Pier Carlo Padoan told a final press conference. Inclusive growth was not a new issue, and has been debated since a while, he said.

“What is new is the will to provide a framework in which outline all policy tools — structural, fiscal, financial, and social — necessary to sustain growth, and ensure it leaves no one behind,” Padoan said.

While there was no single best receipt that could work for all G7 members in the same way, their policies “should aim to lift actual and potential growth, while achieving a more even distribution of its fruits,” the Bari Policy Agenda stated.

“While many potential policy responses are largely domestic, some of them require, by definition, a collective effort,” it stressed.

Meanwhile, financial leaders warned the global recovery would still face various uncertainties.

“Economic expansion continues and is strengthening, although it is still considered modest and faces risks of various nature,” Bank of Italy’s governor Ignazio Visco said.

However, such risks would have diminished recently, and “especially after the results of the latest elections held in Europe,” he added.

Visco also said no one at the G7 finance meeting signalled Italy as a source of possible tensions in view of the political elections due in the country in spring 2018.

Another focus of the meeting was digital economy, with its implication in terms of taxation and cyber security.

The G7 acknowledged the threat represented by cyber crime was rapidly gaining relevance, and vowed to boost cooperation against it, including assessing “economy-wide policy responses.”

They mandated the G7 Cyber Expert Group to develop “a set of high level, and non-binding fundamental elements for effective assessment of cyber security” by October.

While the G7 made its pledge, a massive-scale cyber attack in private companies and public institutions was reported by almost 100 countries and regions in the world.

“The situations occurred in the past days and hours have proved once again the need of a common action,” Italy’s Padoan noted.

Finally, the G7 meeting did not address trade and the risks of protectionism, officials said. The topic was not included in the agenda for fear it might lead to a confrontation among ministers, considering the critical stand of U.S. President Donald Trump’s administration towards international free trade agreements.

“Protectionism has not been discussed neither explicitly nor implicitly,” Padoan confirmed. In the final communique, the ministers and governors only mentioned that they were “working to strengthen the contribution of trade to our economies.”

The issue will be discussed at the G7 summit in Taormina later this month, according to the Italian presidency.

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