BOJ’s Kuroda sounds alarm on global economy ahead of G20
By Stanley White
TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Monday the global economic outlook is highly uncertain, and there are downside risks due to trade friction, China’s slowing economy and Britain’s negotiations to leave the European Union.
“There is a high degree of uncertainty… and the downside risks are large,” Kuroda said in a speech at a seminar.
On a positive note, Kuroda said concerns about capital outflows from emerging market economies and widespread currency depreciation have eased.
He said Group of 20 meetings this year will discuss current account balances and also said bilateral trade measures will not resolve such imbalances.
Japan will host a Group of 20 finance ministers and central bankers’ meeting on June 8th and June 9th.
If current account balances are not in line with economic fundamentals, then the G20 should examine the reasons, Kuroda said, noting that running a deficit or surplus was not necessarily good or bad.
“As president of the G20, we will lead policy discussions at the meeting with all the relevant information and appropriate evaluations of global economic conditions,” Kuroda said.
Kuroda also said countries have improved their defence against global financial crises due to expanded networks of currency swaps and lending facilities provided by the International Monetary Fund.
His comments come amid increasing tension between the United States and its main trading partners.
Japan and the United States are negotiating a bilateral trade pact. U.S. President Donald Trump, who is in Japan for a state visit, has made it clear he is unhappy with Japan’s $68-billion trade surplus with the United States, much of it from auto exports.
Trump has also waged a trade war with China in an attempt to lower the U.S. trade deficit and change trade practices that the U.S. government considers unfair.
(Reporting by Stanley White; Editing by Simon Cameron-Moore)