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Trade War

G-20 says trade foes must resolve tensions themselves

Finance ministers acknowledge rising risks but fail to find prescription

Argentine Treasury Minister Nicolas Dujovne explains the results of the G-20 meeting he chaired in Bali, Indonesia, on Oct. 12.    © Reuters

NUSA DUA, Indonesia -- It is up to the countries dueling over trade to resolve the tensions directly, Nicolas Dujovne, the chairman of the Group of 20 finance ministers meeting, said on Friday as the group wrapped up a two-day session in Bali, Indonesia.

"The G-20 can play a role in providing the platform for discussions," Dujovne, who serves as Argentina's finance minister, told reporters. "But the differences that still persist should be resolved by the members that are directly involved in the tensions."

The meeting came as Indonesia and many other emerging countries struggle with the growing impact of the U.S.-China trade war and capital outflows.

Dujovne stressed that talks between G-20 trade ministers a month ago were "extremely successful," and that they reaffirmed the importance of trade and open markets. But his latest remarks highlight the differences within the G-20.

On Thursday, a Japanese official attending the first day of the G-20 talks said that although some members did not name the U.S. and China specifically, "almost all participating countries acknowledged that the rising trade frictions were amplifying downward risks" to their economies.

Emerging countries were also mindful of the danger of falling currencies and expressed the need for vigilance, the official added. Yet participants were unable to agree on concrete measures to counter the economic threats.

G-20 finance ministers and central bank governors pose on Oct. 12 as global economic headwinds gather.

Indonesian President Joko Widodo, speaking at the plenary session of the International Monetary Fund and World Bank annual meetings, said that "with so many problems in the world economy, it is enough for us to say that winter is coming," a reference to the popular TV series "Game of Thrones."

Indonesia has faced the brunt of U.S. monetary policy normalization and the global uncertainty, as international investors pulled funds out of emerging economies deemed more risky. The rupiah has plunged to a 20-year low against the greenback in recent weeks.

U.S. President Donald Trump, speaking on American television on Thursday, said he has "a lot more" he could do to hurt China's economy. A meeting between Trump and Chinese President Xi Jinping at the upcoming G-20 summit in Argentina is "under discussion," top White House adviser Larry Kudlow said on Thursday.

IMF Managing Director Christine Lagarde warned on Thursday that the global economy was "probably not [strong] enough" to withstand an even more intense trade war. "If these tensions would escalate, the global economy will take a significant hit," she said.

The IMF said in a report issued on Friday that prolonged trade friction could knock 0.9 of a percentage point off Asia's economic growth in the coming years. 

"Sustained trade tensions could further undermine confidence, hurt financial markets, disrupt supply chains, and discourage investment and trade," the report said.

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