Officials at a global finance meeting today in Shanghai urged governments to speed up promised job-creating reforms instead of relying on stimulus to perk up slackening growth.
Governments have tried to squelch expectations the Group of 20 gathering of finance ministers and central bankers from the United States, China, Japan, Germany and other major rich and emerging economies will produce specific growth plans. But they face pressure to reassure nervous financial markets.
Christine Lagarde, the managing director of the International Monetary Fund, said governments should act faster on reforms promised at a G-20 meeting in 2014.
That list included some 800 commitments meant to simplify regulations and boost trade, investment and technology development, but many have yet to be carried out.
"Policymakers do not need to invent yet another trick, but they need to deliver steadily on the commitments they have made," Lagarde said at an event organised by the Washington- based Institute of International Finance alongside the Shanghai meeting.
Referring to monetary and fiscal policy and structural reforms, Lagarde said, "There has to be action on all fronts."
Others at the meeting include US Treasury Secretary Jacob Lew and Federal Reserve Chairwoman Janet Yellen; China's finance minister, Lou Jiwei, and central bank governor, Zhou Xiaochuan; Mario Draghi of the European Central Bank and their counterparts from Europe, South Korea, India and South Africa.
Global growth is at its lowest in two years and forecasters say the danger of recession is rising. The IMF cut this year's global growth forecast by 0.2 percentage points last month to 3.4 per cent. It said another downgrade is likely in April.
Central banks still have room to use interest rate cuts and other stimulus but need governments to follow through with promised economic changes, said Mark Carney, head of the Bank of England.
"Global growth has disappointed because the innovation and ambition of global monetary policy has not been matched by structural measures," said Carney at the IIF event. "In most advanced economies, difficult structural reforms have been deferred."
Germany's finance minister, Wolfgang Schauble, said fiscal stimulus has "reached its limit" and his government will not agree to more coordinated spending in the event of further deterioration in the global economy. He urged other countries to deliver on reforms instead.
"We are not lacking in policy proposals," he said. "We are lacking in policy implementation."
Also today, China's central bank chief promised to avoid weakening its yuan to boost sagging exports as he tried to reassure nervous financial markets about his government's handling of its economy and currency.
The Chinese hosts hoped to use the meeting to promote their campaign for a bigger voice in managing global trade and finance. Instead, the communist government is scrambling to defend its reputation for economic competence following stock market and currency turmoil.
