Broad policy objectives were announced at the meeting of the Group of Seven leaders of the world’s richest economies. In Japan, ideas were broad, concrete measures skimpy. The G-7 leaders — including Canadian Prime Minister Justin Trudeau — claimed a “special responsibility” for beefing up policies to stimulate growth of their economies.
But their declaration glossed over disagreements over co-ordinating public spending policies to help perk up weak consumer spending and business investment, saying each country would take into account “country-specific circumstances.”
Germany, in particular, has balked at calls from other G-7 members to commit to an expansionary fiscal policy.
“Weak demand and unaddressed structural problems are the key factors weighing on actual and potential growth,” they said in the declaration. “We remain committed to ensuring that growth is inclusive and job-rich, benefiting all segments of our societies.”
In Japan the public debt is more than twice the size of its economy. The G-7 group noted the need to ensure debt is “on a sustainable path.”
The G-7 host, Japanese Prime Minister Shinzo Abe said he had won support from his counterparts for his own “three arrows” economic strategy of ultra-loose monetary policy, public spending and longer-term reforms. Christine Lagarde, head of the International Monetary Fund, said there was agreement on such a three-pronged approach.
Abe appealed to his fellow leaders to act to avert another global crisis, comparing the current global economic situation to conditions just before the 2008 financial crisis. Lagarde was less alarmist, saying the world was “no longer in a 2008 moment.”
“We are out of the crisis but we are suffering the legacy of the crisis,” she said, pointing to bad loans on the books of companies and banks as one of the biggest causes for concern.
The G-7 leaders denounced protectionism and trade barriers and noted the negative impact from overcapacity in some industries. One of the biggest headaches, Abe said, was a glut in China’s steel industry.
In their declaration, the summit leaders cited the possible departure of Britain from the European Union, depending on the outcome of a June 23 vote, as one of many potential shocks for the global economy.
British Prime Minister David Cameron said staying in the EU was “all about Britain’s national interest.” “It’s about Britain being big and bold,” he said.
