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WORLD NEWS Monday 26 august 2019

Best G-7 can do for global economy: just don't make it worse

By DAVID McHUGH nard Keynes to describe
Associated Press the optimism needed to
BIARRITZ, France (AP) — The take risks and invest.
global economy craves a Trump's unpredictable
double shot of confidence America-first economic na-
right now but the best that tionalism is upending de-
leaders of the Group of cades of rules-based eco-
Seven can offer is a less nomic cooperation rooted
intoxicating cocktail: not in global institutions like the
making things worse. World Trade Organization
Sharp differences over U.S. and the Group of Seven it-
President Donald Trump's self. Space for action is in-
trade conflict with China creasingly limited, and not
and threats to escalate just by Trump's disruption.
trade tensions with Europe, The U.S. Federal Reserve
along with Britain's impend- has little room to lower inter-
ing departure from the Eu- est rates, and the European
ropean Union on terms yet Central Bank's even less,
to be decided, are mak- with its key benchmarks at
ing it unlikely the leaders or below zero. They could
of seven rich democracies resume stimulus programs
can come up with a unified that include buying bonds
road map on how to help French President Emmanuel Macron and German Chancellor Angela Merkel attend a press con- to lower borrowing rates.
global growth. ference on the situation in Sahel during the G7 summit in Biarritz, southwestern France, Sunday But borrowing rates are al-
What the global economy Aug. 25 2019. ready extremely low.
doesn't need: an outcome Associated Press Many governments still
like last year's summit in have debt hangovers from
Canada. Leaders wrestled deterring investment and slowed sharply — and those economist at Berenberg the global financial crisis,
over a final joint statement, dampening business con- are the forces that could Bank in London, says that leaving less room for spend-
only to have Trump repudi- fidence. During Sunday's carry forward the decade- while the direct damage ing to stimulate investment
ate his signature shortly af- meeting on the economy, long economic expansion from the tariffs is so far lim- and consumption. Germa-
ter leaving the summit and Trump and the others basi- since the Great Recession. ited, the lack of clarity over ny has been running a sur-
tweet criticism of the host, cally stated their contrast- By imposing tariffs, or import terms of trade is corroding plus and has balked at tak-
Canadian Prime Minister ing positions on trade. EU taxes, on Chinese goods, confidence. ing on new debt to spend
Justin Trudeau. officials pointed out the and by threatening to im- "Entrepreneurs and firms on things that could raise
This year's host, French impact of trade tensions on pose new ones on Europe- only invest when they feel growth, such as roads and
Prime Minister Emmanuel the global economy and an autos and even French confident about the out- bridges and high-speed
Macron, has indicated he their support for dealing wine, Trump has sown un- look," he said. "The perva- internet coverage for the
will avoid that possibility by with China within multilat- certainty among business- sive uncertainty about the whole country.
simply not having a state- eral institutions while Trump es about their supply chains future of global trade and China's growth has slowed
ment. Instead, Macron restated his U.S. vs. China — the paths that raw mate- the resulting need to re- from its previous red-hot
may issue his own careful approach. rials, parts and goods take structure cross-border sup- pace, which often hap-
summary of what was dis- In some ways the global as they move through the ply chains weighs heavily pens when an emerging
cussed. economy is doing fairly globalized economy. Mar- on industrial sentiment and economy starts to catch up
Even if the leaders, who dis- well at the moment, with kets have become volatile, investment." with the rest of the world.
cussed the economy Sun- unemployment low in ma- dropping sharply last week Business, he noted, is driven Aging populations in many
day morning, issue a final jor economies. Yet world after the U.S. and China ex- by "animal spirits" - a term developed economies will
statement, it's unlikely to trade and industrial invest- changed more tariffs. coined by 20th-century Brit- strain tax revenues and
contain a solution to what's ment and production have Holger Schmieding, chief ish economist John May- lower consumption.q