WASHINGTON (AP) — Finance officials from the world’s major economies are searching for the right mix of policies to bolster a still-weak global recovery nearly six years after the Great Recession while confronting a range of new threats from a soaring U.S. dollar to a big drop in oil prices.
The financial officials from the Group of 20 nations were also expressing concerns about potential market instability once the Federal Reserve starts increasing a key interest rate which has been at a record low near zero since late 2008.
The discussions were being held among finance ministers and central bank presidents of the G-20, composed of traditional economic powers such as the United States, Japan and Germany and emerging countries such as China, India and Brazil.
Treasury Secretary Jacob Lew and Federal Reserve Chair Janet Yellen were representing the United States at the meetings, which began with a dinner Thursday night and were to conclude with a news conference Friday afternoon. Deputy Prime Minister Ali Babacan of Turkey will sum up the group’s discussions. Turkey holds the rotating chairmanship of the G-20 this year.
The G-20 talks were coming in advance of the spring meetings of the 188-nation International Monetary Fund and its sister lending organization, the World Bank.
In addition to concerns about boosting global growth, the finance meetings were also addressing issues including a plea for more help in fighting the Ebola outbreak in the West African nations of Liberia, Guinea and Sierra Leone. The presidents of those three nations were scheduled to meet Friday with World Bank President Jim Yong Kim and U.N. Secretary-General Ban Ki-moon.
The finance meetings were taking place at a time when much of the global economy remains stuck in a prolonged period of sluggish growth following the 2008 financial crisis and a recession that was the worst in seven decades.
IMF Managing Director Christine Lagarde told reporters Thursday: “The good news is that the global recovery continues. The not-so-good news is that growth remains moderate and uneven.”
She said the goal of this week’s talks was to produce a revamped action plan that will “prevent this new mediocre from becoming the new reality.”
The IMF’s latest economic forecast predicted only modest overall growth and downgraded the prospects for some nations including the United States, forecasting U.S. growth of just 3.1 percent this year, a half-point lower than its January estimate. The reason: IMF economists believe the sharp rise in the value of the dollar will hurt American companies trying to export goods overseas.
Growth prospects in oil-exporting nations are being hurt by the big drop in oil prices over the past year, but those declines are expected to boost prospects in many oil-importing countries.
The IMF this week also raised new concerns that severe volatility in financial markets could be triggered if the Federal Reserve moves, as is widely expected, to start raising interest rates later this year. If the Fed’s rate hikes after a prolonged period of ultra-low rates cause investors to rush for the exits, it could cause stock prices to tumble and interest rates to rise sharply.
Previewing the G-20 discussions, Babacan told reporters Thursday that the G-20 countries needed to do more to carry out commitments they made last year to jumpstart growth by investing in infrastructure projects and removing barriers to trade.
“Growth is there, but it is weak … and uneven,” he said. The finance ministers will produce an action plan that will be discussed by President Barack Obama and other G-20 leaders at a scheduled summit meeting in Turkey in November. The finance officials are trying to achieve the goal of boosting global economic output by more than $2 trillion over the next five years.
In addition to discussions on global growth, the finance officials will be seeking to keep an IMF-supported bailout for Greece on track. Worries that Greece may be unable to meet upcoming debt payments roiled markets this week. Greece is scheduled to make two payments of around 1 billion euros ($1.06 billion) to the IMF next month.
Greek Finance Minister Yanis Varoufakis met with Lagarde on Thursday and in an appearance at a conference sponsored by the Brookings Institution promised to seek a compromise in the upcoming negotiations over bailout terms. But at the same time, he denounced some of the reforms being demanded by the country’s European creditors and said that his new government had been elected to “challenge the logic of a program that has clearly failed.”
However, German Finance Minister Wolfgang Schaeuble, speaking Thursday at the same conference, gave no sign that Germany is ready to back down from its demands that Greece fulfill the commitments it made to receive a 240-billion euro bailout in 2010 from its partners in the 18-country euro currency group and the IMF.
Associated Press writers Harry Dunphy, Christopher S. Rugaber and Paul Wiseman in Washington, Derek Gatopoulos in Athens and Pan Pylas in London contributed to this report.