G20 finance officials meeting in China should support economic growth amid Brexit uncertainty, says IMF

The Group of 20 finance officials meeting in China this weekend should agree on a broad-based approach to support consumer demand, limit private-sector debt and implement structural reforms to combat deepening risks to growth, the International Monetary Fund (IMF) says.

The IMF, in a briefing note to G20 finance ministers and central bank governors gathering in the city of Chengdu, in Sichuan province, said that reducing the uncertainty surrounding Britain’s exit from the European Union would help limit an adverse impact.

“A smooth and predictable transition to a new relationship between the UK and the EU that as much as possible preserves the gains from trade is essential,” the IMF said in the report on Thursday.

“While uncertainty about the outcome of negotiations remains, policymakers should stand ready to act decisively should financial market turbulence threaten the global outlook.”

The G20 note follows the IMF’s move on Tuesday to cut its global growth forecasts again due to uncertainty caused by the June 23 Brexit vote – to 3.1 per cent for 2016 and 3.4 per cent for 2017 – a 0.1 percentage-point reduction for each year

While the IMF said short-term demand needed continued support, it also urged officials to focus on policies that support medium-term and long-term growth, such as those that facilitate balance-sheet repair for banks and companies, and reform labour and business sectors.