Brexit and refugees join worry list in draft communique

(L to R) Organization for Economic Co-operation and Development (OECD) Secretary-General Jose Angel Gurria, US Federal Reserve Board Chair Janet Yellen and British Chancellor of the Exchequer George Osborne chat as they pose for a "family photo" for the G20 Finance Ministers and Central Bank Governors Meeting at the Pudong Shangri-la Hotel in Shanghai on February 27, 2016. China's normally reclusive central bank chief Zhou Xiaochuan is an unusually prominent presence at the G20 finance ministers meeting in Shanghai, racing from seminar to news conference to spread positive messages about the world's second-largest economy.   AFP PHOTO / POOL / ROLEX DELA PENA / AFP / POOL / ROLEX DELA PENA


The Group of 20 added a potential “ Brexit” and an escalating refugee crisis to its long worry list, even as it argued recent market volatility didn’t reflect global growth momentum.
In a draft of the communique obtained by Bloomberg News, the G-20 members agreed to use monetary, fiscal and structural tools to boost growth and “calibrate and clearly communicate” their policies. Underscoring concerns over the limitations of central bank-led stimulus, “monetary policy alone cannot lead to balanced growth,” the document said.
Finance chiefs from the G-20 nations agreed to “consult closely” on foreign exchange markets, warning that excessive volatility can hurt financial and economic stability. The group promised to improve their monitoring of capital flows in an effort to identify potential risks sooner and reiterated past pledges to refrain from competitive devaluations.
“It doesn’t seem the meeting offers concrete, deliverable or coherent solutions to boost growth,” said Raymond Yeung, senior economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “I doubt whether it will have a meaningful impact on the market in the near term.”
Steep losses on global stock markets and volatility in currencies this year fueled calls for G-20 members to do more to stoke economic growth and bolster stability. The International Monetary Fund last month trimmed its global growth projections and said 2016 would be a “year of great challenges.”
Central bankers and finance ministers from the G-20 advanced and emerging nations are gathered for talks in Shanghai, with a final communique expected at the conclusion of sessions on Saturday. A person familiar with the drafting said the version obtained by Bloomberg News was likely to see only minor revisions.
Key economic risks also include escalated geopolitical tensions, a large drop in commodity prices, and volatile capital flows, according to the document. “While recognizing these challenges, we nevertheless judge that the magnitude of recent market volatility has not reflected the underlying fundamentals of the global economy,” the draft reads. “We expect activity to continue to expand at a moderate pace in most advanced economies, and growth in key emerging market economies remains strong.”
“The global recovery continues, but it remains uneven and falls short of our ambition for strong, sustainable and balanced growth,” the draft said. The communique also stressed the importance of a safety net for the global financial system.
In its list of downside risks and vulnerabilities, the draft noted “the shock of a potential UK exit from the European Union” in the seventh line of its text.
Such prominent inclusion in the final document would mark a win for Chancellor of the Exchequer George Osborne, who had sought to rally international finance chiefs behind the campaign to keep Britain in the European Union. The chances of the UK voting to leave the EU climbed after London Mayor Boris Johnson backed the exit, according to some analyst

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