The world's top finance policymakers Sunday weighed theimpact of ballooning trade tensions on the global economy amid differences overthe extent to which they are dragging on growth.
Finance ministers and central bank chiefs from the G20 groupof the world's top economies are expected to note the "downsiderisks" to the global economy from trade battles, notably between the topeconomic superpowers China and the US.
Japanese Finance Minister Taro Aso, who is hosting thetalks, told reporters as the first day of talks wrapped up on Saturday that theworld economy should "firm" in the second half of the year but"downside risks still remain."
Aso said "market confidence could be eroded" ifthere were no rapid resolution to the ongoing trade war between Beijing andWashington, which has seen the world's top two economies impose billions ofdollars of tit-fir-tat tariffs and threaten even tougher action.
IMF chief Christine Lagarde singled out trade tensions asthe "major" headwind facing the global economy, adding that it was a"significant risk on the horizon," in an interview with Japan'sNikkei daily on Sunday.
Lagarde has previously described the trade wars as a"self-inflicted wound" and warned that US-China tariffs so farimposed and threatened could trim 0.5 percentage points off global GDP growthnext year — an amount USD455 billion larger than the entire South African economy.
Meanwhile, French Finance Minister Bruno Le Maire said therewas a "real risk" that "this global economic slowdown could turninto a global economic crisis due to trade tensions."
"A worsening of the international climate and a realtrade war would lead to an even more marked slowdown in global growth, with adirect impact on our jobs, companies, factories and sectors," Le Mairetold AFP in an interview on the sidelines of the meeting.
A Japanese official who declined to be named briefedreporters that "very many countries voiced concerns that escalation of thetrade friction is a very significant downside risk to the world economy. Thatis a fact."
However, the treasury secretary from the US, which continuesto threaten more tariffs on China if there is no trade deal, played down therisk of a global economic conflagration.
"Clearly there is a slowdown in Europe, there's aslowdown in China, there's a slowdown in other parts. I don't believe that's asa result of trade tensions. That slowdown has gone on for the last year,"Steven Mnuchin told reporters on Saturday.
He acknowledged that other policymakers had voiced concernsover the economic impact of a prolonged trade war but pointed to a potentialboon for other countries.
As companies move out of China in order to avoid US tariffs,"there's going to be a big economic opportunity for a lot of othercountries," he said.
"There will be winners and losers," he predicted.
Nevertheless, Mnuchin also pointed to the positive boost tothe world economy that could result from a breakthrough in trade talks, likelyto be the main focus of a meeting between the US and Chinese leaders at a G20summit later this month.
"I think if we get a deal, it's a very positive thingfor economic growth, for us, for China, for Europe, for the rest of the world.The opening of these economies tends to lead, in my mind, to more growth onboth sides," said Mnuchin.