G7 warns of continued global economic uncertainty

Concluding after a three-day meeting, financial leaders of the G7 countries said that the global economic outlook is increasingly uncertain.

"We need to maintain vigilance, agility and flexibility in macroeconomic policy at a time of increasing uncertainty about the global economic outlook," said part of the joint statement issued by G7 leaders on May 13 after a three-day meeting in Niigata city, Japan.

However, finance ministers and central bankers also said the global economy had shown resilience in the face of multiple shocks, including the pandemic, the war in Ukraine and inflationary pressures.

According to Reuters , the statement did not mention the US debt ceiling deadlock, but the topic has repeatedly appeared in discussions in recent days. US Treasury Secretary Janet Yellen said the deadlock is getting more difficult but still hopes for a solution.

British finance minister Jeremy Hunt said it would be "absolutely devastating" if the US failed to reach a deal to raise the debt ceiling and send the growth of the world's largest economy "off track".

G7 financial leaders at the meeting on May 13. Photo: Reuters — G7 financial leaders at the meeting on May 13. Photo: *Reuters*

G7 central bankers vowed to continue fighting inflation and ensure that forecasts for future price movements remain stable. Bank of Japan Governor Kazuo Ueda, who chaired the monetary policy discussion, said most central banks appeared to feel that the impact of recent interest rate hikes had not yet been fully felt.

Seeking to reassure investors after recent US bank failures, G7 finance leaders maintained their April assessment that the global financial system is “resilient.” But they pledged to address “data, supervision and regulatory gaps in the banking system.”

Another issue is China. Japan has been at the forefront of efforts to diversify supply chains and reduce the G7’s reliance on the world’s second-largest economy. In the communique, the leaders set a year-end deadline to launch a new plan to diversify global supply chains.

Specifically, the G7 plans to provide aid to low- and middle-income countries to ensure they have a greater role in the supply chain of energy-related products. "Diversifying supply chains can contribute to energy security and help us maintain macroeconomic stability," the statement said.

The discussions of financial leaders last week will lay the groundwork for the G7 summit starting next weekend in Hiroshima, Japan. Ms. Yellen said US President Joe Biden planned to attend, but could still cancel the trip if progress on the debt ceiling is not made.

Phien An ( according to Reuters )

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