G20 to discuss Japan impact on economy

Finance ministers from the Group of 20 member nations will hold a meeting in Washington, D.C. next month to discuss the economic impacts of the Japanese crisis and measures to curb volatility in global financial and commodity markets, government officials said Sunday.

The meeting, slated for April 14-15, is mainly aimed at gauging the aftereffects on the energy sector amid the nuclear crisis following Japan’s worst-ever natural disasters.

It also follows coordinated action taken by the world’s leading seven economies last week to stabilize the Japanese equity market and soaring currency by selling billions of dollars worth of the yen.

The G20 finance chiefs will focus on seeking ways to tackle fluctuating costs of oil and food products as ongoing political turbulence in the Middle East and nuclear calamities in Japan make them more vulnerable.

Oil ended a highly volatile week with Brent crude prices up nearly 1 percent, despite a drop Friday on Libya’s ceasefire declaration and the United Nations’ approval of a no-fly zone over Africa’s third-largest oil producer.

A week ago, prices went down after expectations of weak short-term demand in Japan, based on partial shutdowns of its industrial facilities.

But energy imports are expected to rebound sooner rather than later given the country’s efforts to compensate for deficits in nuclear power and lingering jitters over a potential supply crunch in the Middle East.

Meanwhile, food security has emerged as a major global risk in recent months, prompting governments to draw up countermeasures.

Nicolas Sarkozy, poised to chair the G20 summit this year, has made surging commodity prices a priority, along with reform of the international monetary system and global economic governance.

At a meeting last month in Paris, the G20 finance ministers and central bank governors expressed concerns that price rallies are mounting pressure on central banks to jack up interest rates to contain inflation.

“We discussed concerns about the consequences of potentially excessive commodity price volatility,” they said in a joint statement, calling on developing countries for “long-term investment in the agricultural sector.”

A study group, launched in January by France, is working on the issue by analyzing its financial aspects and macroeconomic consequences on growth and inflation to provide policy options for the global economic forum, officials said.

“The gravity of measures to mitigate commodity price swings would be far greater at the Washington meeting than before the Japanese earthquakes,” an official said.

But the talks would not seek another joint action such as currency intervention, he added.

“Unlike the rich G7, a lot of G20 members are emerging countries so it would be virtually impossible for them to orchestrate such an action plan due to the disparity of opinions,” the official said.

“They would instead set up broad rules on exchange rate policies and focus on examining and assessing future consequences of the Japanese disaster.”

By Shin Hyon-hee (heeshin@heraldcorp.com)