International Monetary Fund has warned of growing risks to the global economy, calling on some G20 nations to boost government spending. Central bank chiefs and finance ministers from the world's top 20 economies gathered in the southwestern Chinese city of Chengdu to tackle a slowing global economy facing new uncertainties after the Brexit vote.
"Global growth remains weak, and downside risks have become more salient," the IMF said in a report released before the meet. "Growth could be even lower if the current increases in economic and political uncertainty in the wake of the Brexit vote continue." In an update to its April forecast, the IMF lowered its forecasts for global growth this year, and next by 0.1 per cent, to 3.1 per cent and 3.4 per cent respectively.
Britain's new finance minister Philip Hammond is among those attending to deliver a message saying his country is still "open for business", said a statement from the British treasury. The IMF wants advanced economies like Germany and the United States to channel more public spending into infrastructure investment to help boost global growth, an issue that has sparked divisions among G20 members. "Reforms that facilitate the scaling up of infrastructure investment would help raise productive capacity, boost short-term demand directly, and catalyse private investment," it read.
Another official said other challenges included the 'Three Ts' – Terrorism, Turkey, and Trump. Turkey's deputy prime minister Mehmet Simsek sought to reassure other countries. "Despite what has happened a week ago in Turkey... we will continue to strongly adhere to democratic principles and apply rule of law, and not much really has changed," he said. At an earlier G20 meeting in February, this year, finance ministers vowed to use "all policy tools", monetary, fiscal, and structural, to support economic growth. "The G20 process has given us greater ability to focus globally on how to use the different tools at our disposal to promote growth," US Treasure secretary Jacob Lew told the tax seminar.
