G7's draft coronavirus statement
Group of Seven nations are drafting a statement on how they plan to soften the global economic hit of the coronavirus but are not yet making specific calls for new government spending or coordinated central bank rate cuts, a G7 official said on 3 March 2020. The G7 countries will pledge to work together to mitigate the damage to their economies from the fast-spreading epidemic, the official told on condition of anonymity due to the sensitivity of the matter.
- Global financial markets had rallied sharply as central banks from Japan, Britain and France followed the lead of the U.S. Federal Reserve in saying they stood ready to support the global economy.
- The U.S. dollar and Wall Street futures gave up some of their earlier gains after the Reuters report that the statement does not include any immediate calls for fiscal or coordinated monetary stimulus. The language of the statement could change as it is still under discussion.
- The United States - this year's G7 chair - said the group's finance ministers and central bank governors will hold a conference call to discuss measures to deal with the epidemic and its economic impact.
- Fed Chair Jerome Powell, Bank of Japan Governor Haruhiko Kuroda and European Central Bank President Christine Lagarde will also join finance ministers and other G7 central bankers on the call. The virus, which has spread to 60 countries, has killed more than 3,000 people and upended global supply chains.
- Australia's central bank cut interest rates to record lows in what is expected to be the first in a spate of policy stimulus around the world to fight the economic fallout from the coronavirus.
- G7 stands for “Group of Seven” industrialized nations. It used to be known as the G8 (Group of Eight) until 2014 when Russia was excluded because of its annexation of Crimea from Ukraine.
- The G7 was created more than four decades ago as an annual gathering of political leaders to discuss and exchange ideas on a broad range of issues, including the global economy, security and energy.
- France, Italy, Japan, the United Kingdom, the United States and West Germany formed the Group of Six in 1975 so that the noncommunist powers could come together to discuss economic concerns, which at the time included inflation and recession following an OPEC oil embargo. Canada joined the following year.
- Russia eventually joined in 1998 — and its inclusion was meant as a signal of cooperation between East and West after the Soviet Union’s collapse in 1991.
- The G7 is an informal bloc and takes no mandatory decisions, so the leaders’ declarations at the end of the summit are not binding.