Leaders from the Group of 20 economies said Thursday they would be pumping $5 trillion into the world economy as part of a joint pledge to use all policy tools available to cushion the impacts of the global COVID-19 pandemic.
To fight the new coronavirus, the G20 underlined the importance of collective action to restore growth and stabilize financial markets as they held the first-ever virtual G20 summit.
“We commit to do whatever it takes and to use all available policy tools to minimize the economic and social damage from the pandemic,” the G20 leaders said in a statement released following their emergency video conference.
“We will continue to conduct bold and large-scale fiscal support. Collective G20 action will amplify its impact, ensure coherence and harness synergies,” the statement said.
Prime Minister Shinzo Abe told the G20 that the group’s coordination over fiscal policy, as seen in the 2008 financial crisis after the collapse of Lehman Brothers Holdings Inc., was vital, according to a senior Japanese official.
The viral outbreak first identified in China late last year has spread worldwide, restricting travel and leading to lockdowns in some of the hardest-hit countries such as Italy. Financial markets have been rattled by increasing uncertainty over the global economy, despite a series of emergency steps taken by major central banks.
Some developed countries among the G20 are planning stimulus measures for their own economies. The U.S. Senate has passed a $2.2 trillion rescue package, and Japan is expected to draw up an emergency stimulus package in coming weeks.
Japan’s envisaged package, along with stimulus measures already announced by the central government in Tokyo, will likely surpass ¥56 trillion with actual fiscal spending of over ¥15 trillion, sources familiar with the matter have said.
Globally, the number of infections has surpassed 800,000, with over 30,000 deaths, according to a tally by Johns Hopkins University in the United States. The focus has shifted from Wuhan, the city where the first outbreak of the new coronavirus was seen, to Europe and the United States.
At Thursday’s meeting, chaired by Saudi Arabia, Abe called for G20 cooperation in accelerating the development of drugs to treat COVID-19, the illness caused by the new virus, the Japanese official said.
The crisis has led to the postponement of the Tokyo Olympics and Paralympics this year, for up to a year, after host Japan and the International Olympic Committee faced intense pressure in recent weeks to reschedule.
Abe briefed the other G20 leaders on the delay, saying he was determined to hold the games in a “complete” way — taken to mean there should be spectators and no downsizing. The sporting event now needs to be held no later than the summer of 2021.
The G20 leaders expressed support for the postponement, saying in the joint statement they commended the “determination to host the Olympic and Paralympic Games Tokyo 2020 in their complete form as a symbol of human resilience.”
Besides the G20 nations, international organizations such as the World Health Organization, the World Bank and the International Monetary Fund were among participating entities. Spain, Jordan, Switzerland and Singapore were also invited.
IMF Managing Director KristalinaGeorgieva stressed the importance of supporting emerging markets and developing economies “to overcome the brunt of the crisis and help restore growth.”
“They find themselves particularly hard hit by a combination of health crisis, sudden stop of the world economy, capital flight to safety, and — for some — sharp drop in commodity prices,” she said in a statement following the conference.
The latest summit follows a meeting earlier this week, also held in a virtual format, of G20 finance ministers and central bank governors.
The finance chiefs acknowledged that the global economic outlook had deteriorated significantly since their previous meeting in February, saying they would monitor the pandemic’s impact on the economy and markets.
The G20 groups Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union.