OTTAWA (Reuters) - As the Group of 20 leading economies head into ministerial talks in Turkey next week, Canada highlighted the uncertainty of the global economy and concerns over the ability of the United States to sustain global growth.
A senior Canadian finance official, briefing reporters on Thursday ahead of the meeting Monday and Tuesday of finance ministers and central bank governors, cited lower growth expectations for most parts of the world except the United States.
Although it was appropriate to expect the world’s largest economy to shoulder a good deal of the burden of restoring broad-based growth, the question is whether the United States could carry it alone, the official said.
The G20 came into its own during the 2007-09 financial crisis when it put together a global stimulus package, but it is facing a more delicate challenge now of arriving at joint action when economies are running at different speeds.
The U.S. Federal Reserve looks to be on track to raise interest rates this year, a stark contrast to several other surprise rate cuts in the past month by central banks around the world, including the Bank of Canada.
The G20 communique will likely point to the importance of those central bank actions in sustaining near-term demand growth, the official said.
He said the Fed and the Bank of England had voiced support for other central banks doing what they had to do to promote growth.
Canada welcomes the European Central Bank’s quantitative easing program but it is not clear whether monetary policy will be enough to fix the region’s problems, he said.
He pointed to risks posed by Japan, China, Russia, Brazil and others. And he noted the strain that a Fed rate hike, and the accompanying dollar appreciation, could have on countries and companies which have heavily borrowed in the U.S. currency.
All this will lead Canada to express concern about the world economy and stress the importance of sticking to growth plans the G20 agreed to last year in Australia even as countries do what they feasibly can to support near-term demand, he said.
Canada will undoubtedly be asked about the impact of cheap oil, he remarked, and needs to have a sense of what factors are driving global oil prices.
And he said memories of the financial crisis were fresh enough that work would continue apace on financial regulation.
Editing by Franklin Paul and Leslie Adler