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G7 leaders pledge collective action on sagging global growth

G7 Summit 2016

G7 Summit 2016

The leaders of the Group of Seven advanced economies pledged Friday to “collectively tackle” major risks to global growth, including direct political threats to the international order from terrorist attacks, violent extremism and refugee flows.

G-7 leaders wrapped up their annual summit Friday in central Japan with a declaration that claimed a “special responsibility” for leading international efforts to cope with those challenges.

They committed to a co-operative approach in beefing up policies to stimulate and sustain growth of their sluggish economies with use of flexible spending strategies to create jobs and shore up confidence in uncertain times.

“Weak demand and unaddressed structural problems are the key factors weighing on actual and potential growth,” the statement said. “We have strengthened the resilience of our economies in order to avoid falling into another crisis and to this end commit to reinforce our efforts to address the current economic by taking all appropriate policy responses in a timely manner.”

“We remain committed to ensuring that growth is inclusive and job-rich, benefiting all segments of our societies,” it said.

The wording of the leaders’ declaration papers over differences on the issue of expanding fiscal stimulus by saying each will take into account “country-specific circumstances” in committing to stronger policies to support their economies. Germany, in particular, has balked at committing to expansionary fiscal policy.

The declaration includes a reference to the need to ensure debt is “on a sustainable path.”

While Japan is moving toward more public spending and the possible postponement of a needed sales tax increase to revive faltering growth, its own gross public debt is more than twice the size of its economy.

The talks followed an urgent appeal by the host, Japanese Prime Minister Shinzo Abe, to avert another global crisis. Abe compared the current global economic situation to conditions just before the 2008 financial crisis, saying vigilance was crucial for averting a relapse.

“We learned a lesson that we failed to respond properly because we did not have a firm recognition of the risks,” Abe said Thursday.

President Barack Obama backed Abe’s call, saying it was crucial not just to put people back to work but also raise wages and maintain the momentum of the recovery.

“We’ve all got a lot of work to do and we agreed to continue to focus on making sure that each country, based on its particular needs and capacities, is taking steps to accelerate growth,” Obama said.

In their declaration, the summit leaders cited a possible departure of Britain from the European Union, depending on the outcome of a June 23 vote, as one of many potential shocks for the global economy.

The leaders also expressed concern over territorial tensions in the East and South China seas. The declaration does not mention China and its expansion into disputed areas specifically, but calls for respecting freedom of navigation and of overflight and for resolving conflicts peacefully through law.

Japanese officials also highlighted joint efforts on corruption, terrorism, global health and migration — which has become a huge headache especially for European nations — as other top priorities.

German Chancellor Angela Merkel said she didn’t expect any concrete offers in the final communique from other G-7 members to take in refugees. She did say, however, that she had a bilateral meeting with Canadian Prime Minister Justin Trudeau and told him how much she appreciates the large number of refugees his country is taking in.

“One has to consider that Canada isn’t right next to Syria and yet it still feels responsible for the problems there,” she said.

Earlier, Donald Tusk, president of the European Council, said, “Those who criticize us should rather think how to increase their assistance because what Europe provides is already massive. And honestly speaking, if they (the G-7) don’t take the lead in managing this crisis, nobody else will. I will appeal to G-7 leaders to take up this challenge.”

He said the EU is seeking more support for refugees and creation of resettlement schemes and other forms of legal migration around the world.

The annual summit brings together the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States. It is taking place amid extraordinarily tight security around the remote summit venue, with uniformed police standing guard at close intervals on both sides of roads and randomly in forests, rice fields, soccer fields and other locations.

After the summit ends on Friday afternoon, Obama plans to visit the peace park in Hiroshima, becoming the first sitting U.S. president to visit the city on which the U.S. dropped an atomic bomb in 1945 in the closing days of World War II.

CTV News with files from AP.

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