Global finance ministers are facing intensified nagging to loosen purse strings and aid the world economy at a time when central banks can’t keep carrying the burden alone.
Group of Seven officials meeting near Paris confronted an outlook of slowing growth that has already prompted monetary authorities to shift stance and prepare for stimulus. But with limited ammunition for them to deploy and persistent trade tensions threatening to weaken momentum further, finance ministers were told they need to step up to the plate too.
“Monetary policy is one thing, but we need also to reflect about fiscal policy,” Pierre Moscovici, the European Union’s economic and monetary affairs commissioner, told Bloomberg Television. “It’s high time that we build the right policy mix because what we see today is a slowdown in the economy everywhere.”
While finance chiefs can bring such a message home with them when their meeting concludes on Thursday, their deliberations didn’t suggest an urgency to act. That’s more in the hands of central banks for now, with both the Federal Reserve and the European Central Bank poised to deliver some sort of stimulus as soon as this month.
“Central bankers are heroes,” said Angel Gurria, secretary general of the Organisation for Economic Cooperation and Development. “You now need fiscal policy to come in. You now need countries that have the fiscal space to come in and stimulate their economies, invest some more.”
That’s been a frequent lament from the Paris-based club of rich countries, and one often directed to Germany in particular. Europe’s biggest economy, which faces an industrial-led slowdown as Donald Trump’s US administration upends the existing world order in trade, has long been reluctant to borrow and spend more. Yet with its debt currently commanding negative yields, the country might never before have been able to do it so cheaply.
“There is room in many economies and they should use it,” Gurria insisted. “It doesn’t mean they’re going to lose control of their economies or their deficits or their debt.”