Finance chiefs vow action to bolster growth at G20 meet, Greece weighs
By David Dolan and Nick Tattersall
ISTANBUL (Reuters) - Finance officials from the Group of 20 leading economies sketched an uncertain outlook for global growth on Tuesday and vowed to use monetary and fiscal policy if needed to stem any risk of stagnation.
The United States urged nations at the G20 meeting not to resort to currency devaluations to boost exports, an indication Washington is starting to feel wary of its allies manipulating their exchange rates to support growth.
U.S. Treasury Secretary Jack Lew signaled that Germany and others in Europe should engage in deficit spending, saying it would not be a "good ride" for the global economy if only the United States was strong.
"In Europe, there's a need for more fiscal policy. There's a demand shortfall. Different countries have different amount of fiscal space. With the fiscal space, they need to use it to grow demand," he told reporters on the sidelines of the meeting.
"I've used the metaphor of a car that has one tire fully inflated, and the other three not so much. It's not going to be a good ride for the global economy if the one strong wheel is the United States."
The meeting of finance ministers and central bankers in Istanbul comes at a difficult time, with major economies running at different speeds, monetary policies diverging and Greece casting a new shadow over Europe.
Germany, which boasts a record current account surplus, has been unbending in the face of G20 calls to spend more and boost demand. The final G20 communique also pledged to put debt as a share of output on a sustainable path.
German Finance Minister Wolfgang Schaeuble nonetheless gave a more upbeat view of the European outlook, saying forecasts for global growth were improving, and not just because of a strengthening in activity in the United States. Continued...