MEXICO CITY (Reuters) – Group of 20 nations want governments to do more to augment central bank actions to reverse a global economic downturn, Mexican Deputy Finance Minister Gerardo Rodriguez said on Monday.
Deputy finance ministers and central bankers of the G20, which comprises wealthy nations and leading emerging economies, held two days of meetings in Mexico City on Sunday and Monday ahead of a summit in November.
New measures to boost fragile economies from the Bank of Japan, the U.S. Federal Reserve and the European Central Bank have helped to calm markets but were not enough, said Rodriguez, who co-chaired the deputies’ meeting.
“There’s worry about the (economic) environment and there’s a conviction that monetary policy by itself is not sufficient,” Rodriguez told Reuters on the sidelines of the meeting.
Emerging market economies had not made a big issue of a possible revival of the “currency wars” which followed previous rounds of stimulus when countries tried to avoid a flood of cheap money pushing up their currencies.
“I haven’t felt that during the meetings,” Rodriguez said.
“It’s good because the decisions of the ECB and the Fed have helped the stability of markets, but we need more government action.”
Promises made at a June G20 leaders meeting to boost demand, support growth and cut unemployment might need to be implemented more quickly given the deteriorating outlook, he said.
The Organisation for Economic Cooperation and Development cut its growth forecasts for major developed economies earlier this month and the International Monetary Fund warned it was set to scale back expectations for global growth too.
OECD Chief Economist Pier Carlo Padoan, who attended a seminar about the world economy before the G20 gathering, said the outlook was clearly worse since the leaders’ summit.
“The U.S. is weaker, the emerging economies are visibly weaker and the euro area crisis has not improved so far,” he said in an interview on Friday.
Before the meeting, Brazil vowed it would not let its real currency appreciate as a result of aggressive monetary stimulus in advanced economies, but G20 delegates who spoke on condition of anonymity said other emerging economies did not raise similar concerns.
“There was an almost resigned reaction to the monetary easing – on the basis that other measures that should have been taken were not, so it was up to the central banks to do something,” one G20 official at the meeting said.
“There is a perception that the spill-over effects should be smaller than the last time.”
Unlike the last time the Fed undertook a round of stimulus in late 2010 and early 2011, some emerging market currencies, including China’s yuan and Russia’s rouble are depreciating.
Brazil has also cut rates to a record low of 7.5 percent in contrast to the 10.75 percent benchmark rate it had in late 2010, making the country less attractive as an investment destination and less likely to be the target of speculative flows.
(Additional reporting by Alonso Soto in Brasilia; Editing by Kenneth Barry)