Tue, 23 Jul 2019

Global finance ministers and central bankers are prepared to "act promptly" to shore up growth in a world economy that faces downside risks including trade tensions, according to a statement issued Saturday.

While growth is projected to firm up in 2020, "risks remain tilted to the downside," according to a communique by the International Monetary and Financial Committee, the main advisory panel of the IMF's 189 member countries.

Risks include "trade tensions, policy uncertainty, geopolitical risks, and a sudden sharp tightening of financial conditions against a backdrop of limited policy space, historically high debt levels, and heightened financial vulnerabilities," the committee said.

"To protect the expansion, we will continue to mitigate risks, enhance resilience, and, if necessary, act promptly to shore up growth for the benefit of all," officials said.

The policy panel urged central banks to communicate their policy decisions well and act in a "data dependent" way, according to the text, which also reiterated the commitment of nations to refrain from "competitive devaluations" of their currencies. Fiscal policy should be "flexible and growth friendly," officials said.

The communique urged countries to resolve trade tensions, noting that "free, fair, and mutually beneficial goods and services trade and investment are key engines for growth and job creation."

The IMF this week cut its forecast for global growth to the lowest since the financial crisis as the outlook dimmed across most major advanced economies, including the US and euro area. IMF Managing Director Christine Lagarde warned policy makers that the world economy finds itself at a "delicate moment," urging them to avoid "self-inflicted wounds" such as eye-for-an-eye tariffs.

"The global expansion is continuing but at a slower pace," IMFC Chairman Lesetja Kganyago, governor of the South African Reserve Bank, said at a press conference on Saturday.

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