Risks to world economy to be focus for G7 finmins -Canada official

Fri May 13, 2016 3:43pm EDT
 
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OTTAWA May 13 (Reuters) - The health of the world economy is expected to be a major focus at the upcoming meeting of Group of Seven finance ministers, given the increasing number of risks to growth, a senior Canadian official said on Friday.

The topic of international tax evasion and avoidance is also likely to be prominent in the wake of the so-called "Panama Papers", the Finance Department official told reporters.

Policymakers will begin the G7 meeting in Sendai, Japan next week with a discussion of the key risks to the global economic outlook and what policy mix is the right one to bolster growth.

While some, including the International Monetary Fund, have called for countries to take more fiscal action rather than relying on central bank policy to stimulate growth, some countries have argued they do not have the room to take such measures.

Canada's new Liberal government unveiled a stimulus budget earlier this year that included infrastructure spending to boost growth and Finance Minister Bill Morneau is expected to tout a growth agenda and encourage his G7 peers to focus on investment, the official said.

Canada could find an ally on this in the United States, though other countries at the table will also likely be sympathetic, the official said.

The possibility that Britain could vote in a referendum next month to leave the European Union will also likely be discussed. A vote to leave would have significant implications for Britain, the EU and the world economy but it is difficult to know exactly what the impact would be ahead of time, the official said.

As for movements in the foreign exchange markets, the official said he did not expect that to dominate the discussion as G7 members have been clear about the importance of not manipulating currencies.

U.S. Treasury Secretary Jack Lew said earlier on Friday it was important for G7 economies to reinforce pledges to refrain from competitive currency devaluations at their meeting next week. (Reporting by Leah Schnurr; Editing by Chizu Nomiyama)