DENPASAR /Bali/, October 14. /TASS/. Participants of the G20 financial meeting believe that a sharp downturn in developing economies has a higher chance to happen and, if so, will have a stronger effect on global growth than potential trade wars, a Russian delegate has told reporters on the sidelines of the event.
Russian Deputy Finance Minister Sergei Storchak who attended the meeting in Bali, Indonesia on Saturday, said: "the focus [of the discussion] was not on risks linked to protectionism and trade wars, but on the threat of a rapid economic downturn in developing economies."
"Many delegates saw the risk of a sharp decline in their economic growth due to the clear tendency of growing loan costs for those countries, due to depreciation of their currencies against the dollar, as well as domestic problems in some countries where populist tendencies are on the rise. Those risks are more likely to happen than a trade war," the Russian official went on.
Storchak said that although the agenda of the meeting was curbed, the discussion focused not only on the general situation in the global economy and financial markets, but also on risks of negative developments.
"The overall message was that the global economy is now in a fairly good condition, given that the economic growth rates have been above average figures for many years. One might probably wonder what could go wrong here. Nevertheless, the IMF and its leadership considered it necessary to raise the issue of risks of global situation changing drastically," he said.
The key measures suggested by the G20 for mitigating those risks is the creation of international reserves. The measure was said to play a key role in solving issues regarding balance of payments and national budgets.
"The reserves should amount to no less than 3% of import, which is a classical figure. Some colleagues tried to challenge this opinion, because creating the reserves means the simultaneous decrease in domestic investment, and not everyone thinks that this is right. Everyone has a different opinion on the balance of precautions and stimulus measures," the Russian official said.
Other measures suggested by G20 include structural reforms, measures to increase labor efficiency and fight against inequality.