Japanese Prime Minister Shinzo Abe claimed success Friday in winning support for his approach to fighting off a possible economic crisis from fellow leaders of the Group of Seven wealthy nations, despite mounting evidence the formula is failing to yield promised results in Japan.
In meetings at an isolated seaside resort renowned for its crayfish and pearls, Abe appealed for more action to stave off a downturn, insisting that an earlier lack of urgency contributed to the financial crisis of 2008-2009.
Wrapping up the gathering with a sweeping declaration and several additional “action plans,” the leaders acknowledged increasing risks for the global economic outlook, including terrorism, legions of displaced people, and conflicts that “pose a serious threat to the existing rule-based international order.”
But they said their countries had strengthened policies to avoid relapsing into crisis.
Attention swiftly shifted from the G-7 finale as Abe and U.S. President Barack Obama traveled to Hiroshima, where Obama became the first sitting American president to visit the city devastated by a U.S. atomic bomb in 1945 in the closing days of World War II.
Abe said the commitment by the leaders to “use all policy tools — monetary, fiscal and structural” was an endorsement of his own “Abenomics” three-pronged strategy for reviving Japan’s sluggish growth.
“We agreed to mobilize all our resources and launch three ‘arrows’ of monetary, fiscal and structural reform measures,” Abe said. “We will be launching Abenomics to the world.”
“In order to avoid risks of the world economy falling into crisis, Japan will also do its utmost to cooperate and take leadership, mobilizing all possible resources, and boost the engine of Abenomics,” he said.
More than three years after Abe took office vowing to “Bring Japan Back!” from more than two decades of economic doldrums, his formula has yet to deliver the desired results: rising wages, business investment and a sustained recovery that places the world’s third-largest economy into a “virtuous cycle.”
After a slight uptick in growth earlier this year, economists say conditions in Japan have deteriorated, partly due to the slowdown in China and other emerging economies.
But backing from his G-7 counterparts may give Abe a boost as his ruling Liberal Democratic Party heads into a July parliamentary election. It also could embolden him to put off an unpopular increase in the national sales tax, to 10 percent from 8 percent.
“Abenomics is not a failure at all,” Abe told reporters, declaring he would “rev up the engine of Abenomics to the highest level possible.”
While they did not formally concur with Abe that the world is poised on the brink of crisis, the G-7 leaders did claim a special responsibility for beefing up their own economic policies.
Christine Lagarde, head of the International Monetary Fund, also said the world was “no longer in a 2008 moment.”
“We are out of the crisis but we are suffering the legacy of the crisis,” Lagarde said, pointing to bad loans on the books of companies and banks as one of the biggest causes of concern.
But she said, “Many countries can do quite a lot and some more than they are currently doing.”
The G-7 summit brought together the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States. Leaders of major international organizations and a select group of developing countries attended “outreach” sessions held after the G-7 summit meetings ended.
The group’s discussions addressed a wide range of issues, including terrorism and other risks to peace and global growth, the massive flows of refugees and migrants to Europe to escape conflict and poverty at home, global threats to public health, cybercrime, corruption and efforts to help girls and women.
The leaders also expressed unease over territorial tensions in the East and South China seas. The declaration does not specifically mention China and its expansion into disputed areas, but calls for respect for freedom of navigation and overflights and for resolving conflicts peacefully through law.
But the main focus was on economic challenges.
In their statement, the leaders denounced protectionism and trade barriers and noted the negative impact of overcapacity in some industries. One of the biggest headaches, Abe said, was a glut in China’s steel industry.
“It’s a root cause distorting the market, and unless it’s fundamentally resolved, the problem persists,” he said.
The group said Britain’s possible exit from the European Union, depending on the outcome of a June 23 vote, is one of many potential shocks for the global economy.
British Prime Minister David Cameron said staying in the EU is “all about Britain’s national interest.”
“The EU makes us better off. Better off in terms of jobs, better off in terms of growth. Better off in terms of investment by other countries into our economy that creates the growth and the jobs and the livelihoods that we need,” Cameron said.
