RIYADH: The financial leaders of the G7 wealthy nations meet in Japan beginning Thursday as a standoff over the US debt ceiling looms as one of the biggest potential threats to the global economy.
Treasury Secretary Janet Yellen said one of her priorities in Niigata, a port city on the Japan Sea coast, would be to emphasize the importance of resolving the standoff over the national debt in the world's largest economy.
“I will underscore the importance of Congress acting to resolve the debt limit to maintain America’s economic leadership and protect the global economy,” Yellen said in a tweet Thursday.
Yellen also is bound to be seeking to reassure her counterparts over recent bank failures that have raised worries over risks for the global financial system.
The finance ministers and central bank governors are meeting for three days ahead of a G7 summit later this month in Hiroshima.
President Joe Biden said Wednesday that he and congressional leaders had a “productive” meeting Tuesday on trying to raise the nation’s debt limit. They will meet again Friday to try to avert the risk as soon as June 1 of an unprecedented government default if lawmakers in the divided Congress don't agree to raise the debt ceiling.
Yellen said in remarks prepared ahead of Thursday’s meetings that strengthening the global financial system is a key G7 priority. So is a renewed show of support for Ukraine as a coalition of over 30 countries seeks to impose heavy economic costs on Russia for its war.
Global outlook dampens
Global economic risks, including stubbornly high inflation and the fallout from aggressive US and European interest rate increases, will likely be among key topics of debate for the G7 finance ministers and central bankers.
Yellen said the global economy was in a “better place than many had predicted six months ago,” with inflation moderating in many G7 countries including the US.
As rapid rate hikes by the Federal Reserve weigh on the US economy, however, recent data has shown signs of weakness in China, the world's second-largest economy.
China’s consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened, data showed on Thursday, dashing policymakers’ hopes that a rebound in the country’s demand would underpin global growth.
Other key themes to be discussed at the G7 finance gathering include ways to strengthen the global financial system, steps to prevent Russia from circumventing sanctions over its invasion of Ukraine, and diversifying supply chains away from countries like China through partnerships with low- and middle-income nations.
G7 nations include Canada, France, Germany, Italy, Japan, the UK and the US. Other invitees to the meetings in Niigata include the EU, International Monetary Fund and World Bank, and the finance ministers of Brazil, Comoros, India, Indonesia, South Korea and Singapore.
(With inputs from Reuters, AP)
