CHENGDU, China,(Pakistan Point News - APP - 23rd july,2016) - The International Monetary Fund (IMF) and the US urged G20 countries gathering on Saturday to do more to boost the slowing global economy, with Britain's vote to leave the European Union (EU) threatening to further derail growth. Central bank chiefs and finance ministers from the world's top 20 economies met in the southwestern Chinese city of Chengdu, and US Treasury Secretary Jacob Lew told journalists it was "a time of continuing uncertainty in the global economic outlook".
"When you look at the political developments around the world, most recently the referendum in the United Kingdom, it really reinforces the importance of concentrating on shared growth," he said. Britain's new finance minister Philip Hammond was to deliver a message that his country was still "open for business", according to a statement from the Treasury in London. Just ahead of the meeting, the IMF called on key G20 nations to boost government spending.
"Global growth remains weak, and downside risks have become more salient," the Washington-based lender said in a report. "Growth could be even lower if the current increases in economic and political uncertainty in the wake of the 'Brexit' vote continue." In its most recent forecast, the IMF lowered its forecasts for global growth this year and next by 0.1 percent, to 3.1 percent and 3.4 percent respectively. The IMF wants advanced economies such as Germany and the United States to channel more public spending into infrastructure investment to help boost growth, an issue that has sparked divisions among G20 members.
"There is an urgent need for G20 countries to step up their efforts to turn growth around," it said. But Berlin, in particular, has a long history of fiscal rigour and argues that government spending is ineffective at boosting growth, while monetary moves such as ultra-low interest rates and a flood of liquidity and credit are counterproductive. Ahead of the G20 gathering, a German ministerial source told reporters that the use of government stimulus would not be one of the meeting's main themes. But French finance minister Michel Sapin told AFP that as well as monetary policy, which could not "do everything", fiscal policy should be used "as much as possible". "Different countries are in different situations," he said, and governments that had room to support investment should do so, "even if one country or another disagrees".