G-20 leaders tout $5 trillion in coronavirus relief, but fears of multiple debt crises mount

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President Trump joined 19 other world leaders in touting $5 trillion of government aid in response to the coronavirus pandemic, which threatens most advanced economies with a recession.

“We are injecting over $5 trillion into the global economy, as part of targeted fiscal policy, economic measures, and guarantee schemes to counteract the social, economic, and financial impacts of the pandemic,” the G-20 Leaders said in a joint statement following a video teleconference about the coronavirus pandemic.

The teleconference, hosted by Saudi Arabia, took place the morning after the U.S. Senate voted unanimously to pass a $2 trillion emergency relief package. The international confab took place under the shadow of the rivalry between the United States and China, which has worsened in the weeks since the novel coronavirus emerged in Wuhan and spread around the world, but the joint statement struck a note of unity.

“Collective G20 action will amplify its impact, ensure coherence, and harness synergies,” the statement declared. “The magnitude and scope of this response will get the global economy back on its feet and set a strong basis for the protection of jobs and the recovery of growth.”

That optimistic statement coincided with new analysis forecasting that 17 of the G-20 member-states will fall into a recession this year due to the coronavirus, with additional harm that could come from the outburst of government spending.

“We assume that there will be a recovery in the second half of the year, but downside risks to this baseline scenario are extremely high, as the emergence of second, or third waves of the epidemic would sink growth further,” The Economist Intelligence Unit Global Forecasting Director Agathe Demarais said Thursday. “Finally, the combination of lower fiscal revenues and higher public spending will put many countries on the brink of a debt crisis.”

There were traces of U.S.-China disputes even during the conversation. “The virus knows no boundaries, and the pandemic is our common enemy,” Xi Jinping, general secretary of the Chinese Communist Party, told the leaders. “Members of G-20 should adopt common policies to eliminate tariffs, remove trade barriers, facilitate trade, and send a powerful message to boost morale to global economic recovery.”

That proposal was a veiled call for Trump to lift some of the tariffs that he imposed in the course of the trade war with China, especially those that raise the price of medical supplies. “The administration is going to hold the line as long as they possibly can because they see this is so fundamental to their trade policy,” Vanessa Sciarra, vice president of trade and investment policy with the National Foreign Trade Council, told the South China Morning Post.

The pressure could build on Trump to relent on tariffs given the need for medical supplies manufactured in China, but Xi also has angered U.S. officials by refusing to allow hospital masks manufactured by American companies in China to ship their products back home.

“We will expand manufacturing capacity to meet the increasing needs for medical supplies and ensure these are made widely available, at an affordable price, on an equitable basis, where they are most needed, and as quickly as possible,” the G-20 Leaders said.

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