G20 and world growth in focus – BBH

By FXStreet Analysts at Brown Brothers Harriman explained that the G20 finance ministers and central bankers will meet in Shanghai starting tomorrow.

Key Quotes:

“From some quarters, there is a sense of urgency.

The IMF, for example, is likely to cut its world GDP forecast of 3.4% this year.

That forecast is not even two months old. The tightening of global financial conditions, exemplified by the sharp drop in share prices over the last six weeks is heightening anxiety among policymakers and investors alike.

The IMF has called for a strong national and international policy response. It is unlikely to be forthcoming. Moreover, despite China’s aggressive calls for changes in the world’s financial architecture, its leadership at the G20 meeting is unlikely to unveil new initiatives. Instead, the most that can reasonably be expected is a recommitment to existing agreements.

There are two such existing agreements that will likely be reiterated. The first is about fiscal policy. Those countries that have scope for fiscal measures are encouraged to use them. This speaks to countries with current account surpluses, where by definition savings exceeds demand (consumption and investment).

The US Treasury and Federal Reserve officials have not been critical of …read more

Source:: FX Street