Turkey’s Economy Minister Cevdet Yilmaz (6th L) and Labour and Social Security Minister Ahmet Erdem (5th L) pose for a family photo with finance ministers and central bank chiefs from the world’s top 20 economies during the first of day of a two-day G20 meeting of finance ministers and central bank governors in Ankara on Friday. The crisis sparked by rising migrant arrivals to the European Union was one of the major themes discussed at the meeting of finance ministers and central bank chiefs from the world’s top 20 economies, a Turkish minister said. ANKARA: Ministers and central bank chiefs from the world’s top 20 economies sought on Saturday to bolster market confidence in the global economy, despite mounting alarm about the fallout from China’s slowdown. Also preoccupying the economic supremos from the G20 is the monetary policy of the US Federal Reserve, with economists warning a rate rise at its next meeting later this month could deal a heavy blow to emerging markets already mired in trouble and, in some cases, recession, reports AFP. China rattled markets in mid-August with a sudden devaluation of its currency, amplifying concerns about its slowing growth and leading to panic selling on markets. Sources close to the talks told AFP it is highly improbable that China will be specifically mentioned in the final communique to be published later Saturday after two days of talks in Ankara. But US Treasury Secretary Jacob Lew pressed his Chinese counterpart on the sidelines of the meeting to improve communication of economic policy and refrain from “competitive devaluation” of its currency to gain advantages for Chinese exporters. In an unusually strongly-worded statement, a US treasury spokesperson said Lew also noted that it was important for China to signal that it will allow market pressures to drive the yuan “up as well as down”. Indicating the issue would dominate Chinese President Xi Jinping’s visit to Washington later this month, Lew said his trip would “be an opportunity to make progress on issues vital to our economic relationship”. The Chinese central bank on August 11 devalued the yuan by nearly two per cent, surprising markets and raising concerns about the effects of China’s economic slowdown. Meanwhile, a long shadow has been cast by uncertainty over the monetary policy of the Fed, which has held its benchmark federal funds rate at the zero level since 2008 to support the economy’s recovery from a recession. While economists say the current robustness of the US economy could justify a rate hike, the so-called lift-off from zero would suck up liquidity badly need by troubled emerging markets. Key emerging markets are already in severe trouble, in particular Brazil and Russia. The Institute of International Finance, a global association of financial institutions, said the recent decline in equity and currency values in several emerging markets “has reached crisis proportions”. Even if the Fed were to postpone the mooted rate hike until later this year “it would provide only short-term relief”, it added. London-based consultancy Capital Economics said that on some measures the slowdown in emerging markets in the second quarter of this year means their growth is now not much faster than developed markets. Host Turkey, whose ambitious President Recep Tayyip Erdogan wants to make his country a top 10 global economy by 2023, is another key emerging market hitting choppy waters as the impressive growth figures of past years slip away. The Turkish lira on Friday hit a new historic low against the dollar, smashing through the 3.0 to the dollar ceiling, amid continued political uncertainty after inconclusive June 7 elections. But the Financial Times reported Saturday that the final G20 communique would strike a “reassuring” note and even forecast an increase in global growth. An official taking part in the discussions said that the communique would be “realistic”.
