The Group of Seven industrial powers pledged on Friday to seek strong global growth, while papering over differences on currencies and stimulus policies and expressing concern over North Korea, Russia and maritime disputes involving China.
“Global growth remains moderate and below potential, while risks of weak growth persist,” the G7 leaders said after a two-day summit in central Japan. “Global growth is our urgent priority.”
Japanese Prime Minister Shinzo Abe has been playing up what he calls parallels to the global financial crisis as growth in his country sputters. Abe will soon delay for a second time a national sales tax increase, government sources told Reuters on Friday, as the threat of deflation re-emerges and a summer election looms.
The G7 statement said: “We have strengthened the resilience of our economies in order to avoid falling into another crisis and, to this end, commit to reinforce our efforts to address the current economic situation by taking all appropriate policy responses in a timely manner.”
The G7 committed in their broad-ranging, 32-page declaration to market-based exchange rates and to avoiding “competitive devaluation” of their currencies, while warning against wild exchange-rate moves.
This represents a compromise between Japan, which has threatened to intervene to block sharp yen rises, and the United States, which generally opposes market intervention.
The G7 vowed “a more forceful and balanced policy mix” to “achieve a strong, sustainable and balanced growth pattern”, taking each country’s circumstances into account, while continuing efforts to put public debt on a sustainable path.
Abe has stressed the need for flexible fiscal policy to sustain economic recovery, while German Chancellor Angela Merkel has been sceptical about public spending to boost growth.
The G7 called global industrial overcapacity, especially in steel, a “pressing structural challenge with global implications”.
NORTH KOREA, ‘BREXIT’ WORRIES
The G7 demanded that North Korea fully comply with United Nations Security Council resolutions and halt nuclear tests, missile launches and other “provocative actions”.
The group condemned Russia’s “illegal annexation” of the Crimean peninsula from Ukraine. The declaration threatened “further restrictive measures” to raise the costs on Moscow but said sanctions could be rolled back if Russia implemented previous agreements and respected Ukraine’s sovereignty.
The G7 expressed concern over the East and South China Seas, where China has been taking more assertive action amid territorial disputes with Japan and several Southeast Asian nations.
Without mentioning Beijing, the G7 reiterated its commitment to the peaceful settlement of maritime disputes and to respecting the freedom of navigation and overflight. The group called for countries to refrain from “unilateral actions which could increase tensions” and “to settle disputes by peaceful means”.
The G7 also called large-scale immigration and migration a major challenge and vowed to increase global aid for the immediate and long-term needs of refugees and displaced people.
Referring to Britain’s referendum next month on whether to leave the European Union, the G7 said an exit “would be a serious risk to global growth”.
The G7 comprises Britain, Canada, France, Germany, Italy, Japan and the United States.