Saturday, May 21, 2016

Schäuble – Structural reforms are crucial for growth – Reuters Germany

Sendai the finance ministers and central bankers of the seven most industrialized countries want to get the global economy, especially with structural reforms gaining momentum.

In this issue there is unity, said German Finance Minister Wolfgang Schaeuble on Saturday after a meeting of the G7 group in Japanese Sendai. “The most important are structural reforms,” ​​emphasized Schäuble. From our generous government spending programs to stimulate the sluggish world economic growth, has been fought over in the past, at the two-day G7 meeting was no more talk about it.

Schäuble stressed in government spending, it’ll not always at the level, but to the composition. It is crucial, it possible to make selective so that they promote the growth sustainable. Japan’s Prime Minister Shinzo Abe had originally hoped to send the G7 meeting a common signal for an expansionary fiscal policy to strengthen global growth. But that has little chance of success after the discussions in Sendai. Neither wanted to give the priority Chancellor Angela Merkel, Schäuble still sees a reason on its financial and budgetary stance to change anything.

Germany continues as the bulk of the G7 partners on a mix of structural reforms and investment in areas that promise long-term success. The goal is a balanced and sustainable growth. For this you should use different recipes depending on the specific country conditions by G7 considers. The economic outlook would be assessed at least slightly more optimistic in the group, said Schäuble. “It was agreed that the world economic situation is better than some still feared a few months ago.” The G7 finance ministers and central bankers were preparing in Sendai before the Summit of Heads of State under consideration in the coming week in Ise-Shima.


Given the recent price fluctuations on the currency market and the appreciation of the Japanese yen, the US government Japan warned well before interventions in the exchange rate. Even Bundesbank President Jens Weidmann feared a harmful devaluation, if the course is actively influenced in order to achieve commercial objectives. The G7 host country feels threatened by the recent sharp appreciation of the yen. The more expensive exports and threatening to dampen the already delicate Japanese growth even further.

Japan’s Finance Minister Taro Aso met with his US colleagues Jack Lew on Saturday for bilateral talks to discuss this speaking topic. Lew pointed his Japanese colleagues on commitments under the G7 and the G20 industrialized and emerging countries group, not to intervene in the exchange rate. The US Treasury Department reviewed the price trend the yen widely seen as normal. Thus, it also signaled that it sees no justification for any intervention by the Japanese central bank to push the yen. By contrast, Japan’s Finance Minister Aso expressed alarmed. He also pointed to former G7 and G20 statements in which disordered, extreme exchange rate fluctuations had been designated as undesirable. From Japan could derive a justification, possibly politically intervene to prevent further yen rise in price.

topic of discussion was also the risk of withdrawal of Britain from the European Union in the G7. He hoped that the referendum did not lead on this issue to a Proposed referendum on United Kingdom membership of the European Union, Schäuble said. The G7 ministers were unanimous in their opinion that a withdrawal of the country from the EU would be the wrong way.


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