WASHINGTON - Finance chiefs from the Group of 20 major economies on Thursday warned of the downside risks facing the world economy despite positive developments in the U.S.-China trade row and the United Kingdom's planned exit from the European Union.
"We are seeing a delay in the recovery of the world economy," Japanese Finance Minister Taro Aso said after the first day of the talks in Washington. Many participants pointed to the downside risks to the global economy and "a tense feeling" was shared, a Japanese official said.
The two-day talks are taking place on the sidelines of the annual meetings of the International Monetary Fund and World Bank, both of which have warned of a deteriorating global economic outlook.
In its latest forecast released Tuesday, the IMF said the world economy is forecast to grow 3.0 percent in 2019, its lowest level in a decade and a downgrade from its July estimate, amid the ongoing trade war between the world's two largest economies.
The Washington-based institution estimated that the cumulative economic losses from the trade dispute could amount to some $700 billion by 2020, or about 0.8 percent of global economic output.
Bank of Japan Governor Haruhiko Kuroda, who chaired the G-20 meeting with Aso, told reporters earlier Thursday that he has seen "some improvement" in U.S.-China trade ties and the Brexit issue, but warned that neither issue has been fully settled and that "overall risks (to the world economy) still remain high."
The United States said on Oct. 11 that it has reached a "phase one" trade deal with China, under which it suspended an increase of tariff rates planned from October on about $250 billion worth of Chinese imports in exchange for China's purchases of farm products.
But other issues, including U.S. allegations that China forces American companies to transfer their technology in exchange for market access, have been left for subsequent negotiations. Another U.S. tariff hike, planned in December, also remains on the table.
Kuroda told reporters that the range of disputed trade issues between the United States and China is "quite broad," and that the path of future negotiations is unclear.
On the new agreement reached Thursday for the withdrawal of the United Kingdom from the European Union, the BOJ governor noted that it is uncertain whether the deal will pass the U.K. parliament.
Kuroda said he believes there is no major change in the scenario according to which growth is expected to pick up from this year to next year, although the timing of the world economy's recovery is being "pushed back." Aso said he shares the view with Kuroda.
On the second day of the G-20 meeting, members are planning to look into the proposed digital currency Libra, which Facebook Inc. announced in June and hopes to roll out in 2020, according to Japanese officials.
It is feared the cryptocurrency would have a significant impact on the financial system if it were launched and widely used by the public for payments and settlement purposes.
Facebook, with 2.7 billion users, or about a third of the world's population, believes that the Libra system will help people, especially in developing countries who have no access to traditional banks but have mobile phones, to send money overseas at low cost.
But concerns exist over whether the cryptocurrency can prevent potential money laundering, terrorist financing and other unlawful activity. In July, the Group of Seven industrialized nations called for ensuring "the highest standards of financial regulation" over the project.
A G-7 working group said in a report released Thursday that no global project of so-called stablecoins -- cryptocurrencies pegged to real currencies like Libra -- should begin operation "until the legal, regulatory and oversight challenges and risks" are adequately addressed.
The G-20 are also expected to discuss international taxation rules amid criticism that large U.S. IT companies, including Google LLC, are not paying their fair share of taxes as they can book profits in low-tax jurisdictions.
The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.
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