G7 ‘will not call for fiscal or monetary support’ in coronavirus statement
The G7 nations will voice their determination to combat the economic impact of the coronavirus outbreak, but reportedly will not directly call for new government spending or coordinated interest rate cuts.
Finance ministers and central bank governors from the G7 are due to issue a statement following a conference call on the epidemic at midday, but a draft statement does call for concrete fiscal or monetary measures, according to Reuters.
The call has been convened as the worsening coronavirus epidemic, which has now claimed over 3,100 people, stokes fears of a possible global recession.
G7 countries are set to pledge to work together to mitigate the damage caused to their economies, one official told Reuters.
Another source said G7 members would voice their determination for joint coordinated action, if required, to limit the impact on the global economy.
Both sources told the news service that the group would stop short of directly calling for fiscal and monetary measures.
“We are still very much at the beginning of the outbreak. And it is not yet possible to predict how the epidemic will develop. So the impression is that it’s still too early for such a step,” one source said.
News of the draft statement will come as a disappointment to some investors, who had been hoping the G7 would announce more explicit measures.
“At this stage, I don’t think the G7 are willing to show their stimulus hand and are holding back the fiscal cannons for a later date once they can better quantify the supply-side shock from Covid-19,” said Axitrader chief market strategist Stephen Innes.
“The expectation of a sharp rise in monetary and fiscal stimulus provides plenty of short-term optimism, yet pessimists will likely wait for that initial bullish wave to pass before once again hitting the sell button should the virus continue to spread,” said IG senior market analyst Joshua Mahoney.