G7 to deploy all policy tools to combat coronavirus

TOKYO: Group of Seven finance officials said on Tuesday they would use all appropriate policy tools to achieve strong, sustainable global growth and safeguard against downside risks posed by the fast-spreading coronavirus.

G7 finance ministers were ready to take action, including fiscal measures where appropriate, to aid the response, Japanese Finance Minister Taro Aso told reporters. Central banks would continue to support price stability and economic growth.

“We reaffirmed our commitment to adopt all appropriate policy steps to protect the economy from downside risks posed by the coronavirus, and that we stand ready to cooperate further on timely and effective measures,” Aso said after a G7 call.

He was short on specifics and said the desirable policy response would vary from country to country.

Asked if all appropriate policy steps would include both monetary and fiscal policies, Aso said: “Yes, anything will be included, both monetary and fiscal steps.”

The G7’s united front offset anxiety over the coronavirus’ rapid spread in dozens of countries and aided a recovery in world stocks and oil prices.

“This is a tug of war between hope and fear. Central banks are giving hopes with their potential stimulus,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.

“The question is what they will do? Monetary policy is already very loose and interest rates are very low,” Menon added.

German Finance Minister Olaf Scholz said the G7 had “all means” at its disposal.

“Should the need arise, we have all the means to counter a global downturn,” Scholz said in a statement on Twitter.

Global stocks suffered a rout last week on fears that the disruption to supply chains, factory output and global travel caused by the epidemic could deal a serious blow to a world economy trying to recover from the U.S.-China trade war.

The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread around the world over the past week, with more new cases now appearing outside China than within.

There are more than 90,000 cases globally, with more than 80,000 of them in China, and infections appearing in 77 other countries and territories, with Ukraine the latest country to report its first case.