The Group of Twenty finance ministers and central bank governors, meeting in Mexico, have urged the U.S. to take steps to avoid the so called 'fiscal cliff,' the scheduled tax increases and severe spending cuts that could hurt growth of the world's largest economy.
The meeting also discussed the risks emanating from the delay in resolving the Eurozone debt crisis. The possible fiscal tightening in Japan also came up for discussion, which may unsettle the already fragile global economic growth.
The G20 feels that the global growth remained "modest" and risks remained "elevated," reports said citing a draft communique to be released after the meetings' conclusion today.
Australia's Treasurer and Deputy Prime Minister Wayne Swan said Sunday that his G20 colleagues see the global recovery as "fragile" and urged leaders of major economies to press ahead with the necessary structural reforms needed to underpin growth.
European governments must accelerate efforts towards closer banking, fiscal and political ties, Swan, who is attending the G20 meeting, said in his weekly economic note on Sunday. "More Europe, not less remains the most effective way to deliver a lasting resolution to the region's sovereign debt crisis," he added.
Avoiding the U.S. fiscal cliff is critical to support activity in the months ahead, Swan said. He urged the U.S. to outline a strategy to get its budget back on a sustainable footing to support economic growth over the longer term.
"We need the G20 to be not just an effective manager of crises as they occur" but also a "vehicle which can help deliver a more enduring upwards trajectory for the global economy."
Meanwhile, Canadian Finance Minister Jim Flaherty reportedly said in Mexico, that the U.S. fiscal cliff is currently the biggest risk facing the global economy. "In the near term, clearly the U.S. situation is the highest- risk situation," he told reporters.
Flaherty urged G20 members to keep their commitments in order to retain its credibility as an effective organization.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.