OTTAWA – Canada’s finance minister says he’s encouraged by “very positive feedback” from his Group of 20 peers to the Liberal government’s economic blueprint outlined throughout a two-day summit in Shanghai.
But while Bill Morneau said the gathering of industrialized nations – coming at any given time of growing concerns over the stability from the global economy – “made good progress” to help to bolster sustained growth, the particular text of the group’s communiqu offered few information on the agreement.
The G20 finance and central bank chiefs, however, maintained they were “dedicated to further enhancing the structural reform agenda” first decided to in 2014 – a goal that has been complicated through the global collapse in oil prices since mid-2015 and new concerns that a possible exit by Britain in the Eu would provide another shock towards the global economy.
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Still, in a statement released around the weekend, Morneau said the G20 ministers “made good progress on advancing policies to bolster the global economy.”
“I received very positive feedback on Canada’s new path for long-term growth, and recognition that whenever the center class thrives, we all thrive,” he explained.
He added the government’s March 22 budget – the first because the Liberals, led by Justin Trudeau, came to power – “will demonstrate Canada’s resolve for making smart and necessary investments to be able to grow the economy and make a real difference for that middle-class and also the most vulnerable.”
That policy path includes tax breaks for middle-class families, increases to the Canada Child Benefit for all those with low-incomes and spending on infrastructure projects.
To do that, the Liberals ran on the campaign to return Ottawa to a deficit – a shortfall that’s now likely to be $18.4 billion within the coming fiscal year, up from a promised $10 billion deficit.
Many economists, however, believe the government will need more firepower to avoid Canada sinking into another recession. They suspect that spending level could rise to as much as $30 billion or even more in only the very first year of the government’s four-year mandate.
Meanwhile, previous structural reform commitments through the G20 were designed to add two percent to global growth by 2018. So far, the International Monetary Fund has predicted that growth will only reach 0.8 percent for the reason that timeframe.
“The worldwide recovery continues, however it remains uneven and falls short in our ambition for strong, sustainable and balanced growth,” according to the communiqu, released at the conclusion of G20 talks on Saturday.
“Monetary policies continues to aid business activities and ensure price stability,” the group said, but added that “monetary policy alone cannot lead to balanced growth.”
Indeed, the financial institution of Canada – led by governor Stephen Poloz, who also attended the G20 summit – has cut its key lending rate twice previously year, both times by 25 basis points, first in January 2015 and again the next July.
The central bank rates are now at 0.5 percent and expected to remain there until policymakers can better gauge the impact of the federal government’s economic plan.
During the G20 meeting, IMF managing director Christine Lagarde emphasized the requirement for structure reform has become “even more pressing because of the disappointing state from the global recovery.”
“Our research finds that for the more advanced economies, reforms that foster technology and innovation may have the best pay-off,” Lagarde said within an address in Shanghai. “For emerging market economies, strengthening property rights and capital markets may be more relevant.”
Despite these goals, the G20 didn’t support requires a co-ordinated global spending package that could help limit the risk of global financial trouble, much like that observed in 2008-09.
“(But) we will use all policy tools – monetary, fiscal and structural – to strengthen growth, boost investment and be sure stability in financial markets,” the G20 communiqu said.
In a statement, the Finance Department said Morneau “encouraged his G20 counterparts to apply long-term growth strategies.”
In Shanghai, also, he met with Canadian business leaders “to discuss making more global opportunities for Canadian businesses to develop and enjoy the international stage,” the minister’s office said.
gisfeld@nationalpost.com
Twitter.com/gisfeld
