By Leika Kihara
FUKUOKA, Japan (Reuters) – Bank of Japan Governor Haruhiko Kuroda on Saturday maintained his view the global economy will recover in the latter half of this year, but warned that uncertainties remain as fallout from the Sino-U.S. trade war deepens.
Kuroda said the global economy is “stabilising somewhat” from its weakness late last year, as central banks maintain supportive policies and China takes stimulus measures to prop up growth.
“There’s no change to the view the global economy will pick up in the latter half of this year,” Kuroda told reporters ahead of the Group of 20 finance leaders’ meeting to be held in the southern Japanese city of Fukuoka. “But uncertainties remain, particularly those regarding trade,” he added.
Kuroda’s view on global risks is important because the BOJ’s forecast on the Japanese economy is based on the assumption global growth will rebound in the latter half of this year.
Global investors’ hopes for a pick-up in the second half of the year have been thrown into doubt by last month’s sudden escalation in the U.S.-China trade war and a slew of weak data from major economies that threaten to further weigh on business and consumer confidence.
Widening fallout from the U.S.-China trade war will test the resolve of G20 finance leaders to show a united front at their two-day gathering ending on Sunday, as investors worry if they can avert a global recession with dwindling policy ammunition.
The BOJ is among major central banks that could come under pressure to ramp up its already massive stimulus programme, as the trade dispute raises fears of a global recession.
Kuroda praised U.S. President Donald Trump’s decision to put off imposing tariffs against Mexico after the two countries reached a deal to contain the migration of immigrants crossing the southern U.S. border.
“It’s a very good outcome not just for the United States and Mexico, but for the global economy,” Kuroda said.
(Reporting by Leika Kihara; Editing by Chris Gallagher & Kim Coghill)