weigh war, energy, tension with China – Corriere.it

“The global economy has shown resilience against multiple shocks, including the pandemic, Russia’s war on Ukraine and inflation.” But “we must remain vigilant, and be agile and flexible in our macroeconomic policies in a context of heightened uncertainty about global economic prospects”. The economy and finance ministers of the G7 countries show cautious optimism in their final communiqué at the end of their meeting last night in Japan.
The same tones were relaunched by the governor of the Bank of Italy, Ignazio Visco, who warns: “If there is one thing I would recommend, it is to be attentive to how we judge” the prospects for future monetary policy moves, “there is it is a very high level of uncertainty», due to the «still unfinished war», the energy crisis which has subsided for now but remains an unknown factor, and the tension with China which leads to further fragmentation. Furthermore, for Visco “the risks of the real economy are beginning to be felt and the banks are more cautious” both in Europe and in Italy.
A condition that compresses credit more than the interest rate tightening is already doing. In this context, explained the governor, it can be said that the “dimension” of the increases decided by the European Central Bank has reduced, but the “direction” continues to be that of containing the increase in inflation. For Visco «monetary policy needs time to spread» and «the transmission is taking place in the expected way. Then we’ll see», that is, from time to time the ECB will evaluate the moves on the basis of available data such as demand or the rapid decline in inflation in the medium term.

Support for Ukraine

“We reaffirm our unwavering support for Ukraine for as long as necessary and unite our condemnation of Russia’s illegal, unjustifiable and unprovoked war of aggression against Ukraine,” the world’s major economies reiterated. After three days of talks, the ministers also proposed increasing Ukraine’s economic and budgetary support for 2023 and early 2024 to $44 billion. The increase in aid (about 5 billion dollars), will allow the International Monetary Fund to approve a program to support Kiev for an amount of 15.6 billion dollars over four years.

Climate action

On the climate front, the ministers explained that “We are determined to tackle climate change as a matter of urgency, through large-scale action in this critical decade, in order to keep the global temperature increase within the limit of 1.5 degrees”. ». The text of the final communiqué underlines the “need to strengthen international cooperation and coordination on climate change mitigation policies within the G7” and undersigns the commitment to “increase our joint efforts to mobilize funding for the climate, with the aim of addressing the two objectives of climate mitigation and adaptation”.

Bank supervision

“The banking system is resilient but we are vigilant,” the G7 ministers wrote in the final communiqué. “We will continue to work closely with supervisors and regulators to monitor developments in the financial sector and stand ready to take appropriate action to maintain the stability and resilience of the global financial system.” However, the ministers reiterate that “our financial system is resilient, underpinned by the financial regulatory reforms implemented after the 2008 financial crisis, including significant increases in banks’ capital and liquidity levels, an international framework to effectively resolve failing institutions , the strengthening of cross-border regulatory and supervisory cooperation’.

The global distribution chains

Among the other topics addressed, that of global distribution chains. The G7 foresees the launch of a partnership program to diversify supply chains as early as this year: this was stated by the finance ministers of the group of seven meeting in Japan, also in view of an important summit scheduled for next week. Ministers did not directly mention efforts to reduce reliance on trade with China or Russia as rationale for the new framework, which focuses on clean energy technology.