Financial leaders from the Group of 20 major economies scrambled on Friday for a way to keep global growth from stalling amid concerns about a drop-off in international trade and the waning effectiveness of loose monetary policy.
The G20 gathering, the highlight of the International Monetary Fund and World Bank spring meetings in Washington, came amid growing pressure on richer nations to boost infrastructure spending, deregulate industries and spur employment.
Earlier this week the IMF cut its 2016 growth forecast for the world economy, the fourth such move in less than a year.
In a statement to the G20 on Thursday night, Indian Finance Minister Arun Jaitley said governments could not continue relying on central banks to take the lead in spurring growth and should consider boosting spending.
"We feel that the efficacy of monetary policy instruments has reached its limits and that its pass-through has not been seamless," Jaitley said. "The time is ripe for a re-evaluation of the fiscal policy space, with a greater focus placed on public investment."
Currency debate
But Jaitley's currency views appeared at odds with those of Japanese officials, who expressed concerns about increases in the value of the yen, which recently hit a 17-month high against the dollar.
Japanese Finance Minister Taro Aso told reporters late on Thursday that he stressed those concerns in a meeting with US Treasury Secretary Jack Lew, a sign that currency issues would be high on the list of the G20's priorities.
"I told [Lew] that excessive volatility and disorderly currency moves would have a negative impact on the economy. I also expressed deep concern over recent one-sided moves in the currency market," Aso said.
Bank of Japan Governor Haruhiko Kuroda also described the yen's ascent so far this year as "excessive," the first time he had referred to the currency move in such a way.
Do more
Facing a shaky world economy and political attacks on free trade, global finance leaders meeting in Washington are searching for ways to increase cooperation to battle a variety of economic threats.
The IMF is urging countries to launch a new round of public works projects to improve roads and other types of infrastructure in hopes the higher government spending will boost growth. But in an era of high budget deficits, that call has not met with much support.
In opening news conferences on Thursday, IMF Managing Director Christine Lagarde and World Bank President Jim Yong Kim stressed the need for stronger policies to combat the growing risks.
Both said the answer to stagnant wages in many industrial nations and complaints about jobs being lost to trade competition was to pursue growth-oriented policies such as a boost in government infrastructure spending. Kim rejected the idea that countries can boost stagnant wages by raising trade barriers. He said that lowering trade barriers had helped lift millions of people around the world out of poverty.
