G-20 Talks: Weaker Oil Prices ’a Plus for Global Economy’
Turkish Deputy Prime Minister Ali Babacan, Bank of Japan Governor Haruhiko Kuroda and Turkey’s Central Bank Governor Erdem Basci in Istanbul. (Reuters)
ISTANBUL: The recent slide in global oil prices is a benefit for the world economy and could lead to some upgrades of economic forecasts, Bank of Japan Governor Haruhiko Kuroda said on Monday.
“For the world economy, without a doubt, weaker oil prices are a plus,” Kuroda said on the sidelines of the G-20 meeting of finance ministers and central bankers in Istanbul.
The recent rout in oil prices, and its implication for the global economy, is a major theme at the G-20 meeting, as lower fuel prices are seen pushing some economies dangerously close to deflation.
Turkey is hosting the G-20 finance ministers and central bank chiefs for the first time as it holds the rotating presidency of the elite global club.
Kuroda, however, said that the overall benefits of lower oil prices could potentially lead to increased expectations for economic growth.
“We could see some movement toward upgrades of economic forecasts,” he said.
He also said the recent weakness in the Japanese yen was not posing a problem for the world’s third-largest economy.
Ministers and central bankers from the world’s top 20 economies gathered in Istanbul to discuss solutions to the debt crisis in Greece and ways to push forward faltering global growth.
Ministers were Monday holding bilateral meetings ahead of a formal dinner, with the full plenary session to begin on Tuesday.
While Greece is itself not a member of the G20, intense talks were expected on its debt crisis ahead of an emergency meeting of euro zone finance ministers on Wednesday, amid fears it could leave the euro.
French Finance Minister Michel Sapin said that a financing solution needed to be found for Greece but added: “We cannot simply say, we’ll finance, we’ll finance” Athens without “respect for European rules” in exchange.
The secretary general of the Organization for Economic Cooperation and Development (OECD) Angel Gurria said the new Greek government was now more aware of the constraints facing its creditors and “hopefully this will be the beginning of a positive process.”
Turkish Deputy Prime Minister Ali Babacan, the government’s pointman on the economy who is hosting the meeting, expressed hope that Greece, the EU and all its creditors would come up with “mutually accepted results.”
“We hope that rationality wins at the end,” he said.
New leftist Greece Prime Minister Alexis Tsipras vowed he would be “unshakeable” in implementing his anti-austerity election promises in comments sure to annoy Germany, whose Finance Minister Wolfgang Schaeuble was also expected in Istanbul.
In a joint opinion piece for the Wall Street Journal, US Treasury Secretary Jacob Lew and British Finance Minister George Osborne said the Istanbul meeting was taking place against a “backdrop of challenges.”
“Global growth is forecast to slow. Deflationary risks are evident in some regions. There is a shortfall in demand,” they said.
Osborne and Lew called on governments to use the “full set of tools” to support strong, sustainable and balanced growth.
At their November 2014 summit in Brisbane, Australia, G20 leaders set a goal of raising their countries’ combined GDP by 2 percent over the coming five years.