G7 to deploy all policy tools to combat coronavirus

Crowds wearing protective masks, following the outbreak of the coronavirus, are seen at the Shinjuku station in Tokyo, Japan, March 3, 2020. Reuters

TOKYO, REUTERS: Group of Seven finance officials said on Tuesday they would use all appropriate policy tools to achieve strong, sustainable global growth and safeguard against downside risks posed by the fast-spreading coronavirus.

G7 finance ministers were ready to take action, including fiscal measures where appropriate, to aid the response, Japanese Finance Minister Taro Aso told reporters. Central banks would continue to support price stability and economic growth.

“We reaffirmed our commitment to adopt all appropriate policy steps to protect the economy from downside risks posed by the coronavirus, and that we stand ready to cooperate further on timely and effective measures,” Aso said after a G7 call.

He was short on specifics and said the desirable policy response would vary from country to country.

Asked if all appropriate policy steps would include both monetary and fiscal policies, Aso said: “Yes, anything will be included, both monetary and fiscal steps.” The G7's united front offset anxiety over the coronavirus' rapid spread in dozens of countries and aided a recovery in world stocks and oil prices.

“This is a tug of war between hope and fear. Central banks are giving hopes with their potential stimulus,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.

“The question is what they will do? Monetary policy is already very loose and interest rates are very low,” Menon added.

German Finance Minister Olaf Scholz said the G7 had “all means” at its disposal.

“Should the need arise, we have all the means to counter a global downturn,” Scholz said in a statement on Twitter.

Global stocks suffered a rout last week on fears that the disruption to supply chains, factory output and global travel caused by the epidemic could deal a serious blow to a world economy trying to recover from the U.S.-China trade war.

The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread around the world over the past week, with more new cases now appearing outside China than within.

There are more than 90,000 cases globally, with more than 80,000 of them in China, and infections appearing in 77 other countries and territories, with Ukraine the latest country to report its first case.

China's death toll is 2,943, with more than 75 deaths elsewhere.

CONTAINMENT SUCCESS New cases in China have been falling sharply, with 125 reported on Tuesday, thanks to aggressive containment measures.

After what critics said was an initially hesitant response, China imposed sweeping restrictions, including suspensions of transport, sealing off communities, and extending a Lunar New Year holiday across the country.

Now China is increasingly concerned about the virus being brought back into the country by citizens returning from new hot spots elsewhere. Authorities on Tuesday asked overseas Chinese to reconsider or minimise their plans to travel home.

All travellers entering Beijing from South Korea, Japan, Iran and Italy would have to be quarantined for 14 days, a city official said. Shanghai has introduced a similar order. The most serious outbreak outside China is in South Korea where President Moon Jae-in declared war on the virus, ordering additional hospital beds and more masks as cases rose by 600 to nearly 5,000. Thirty-four people have died in South Korea.

In the United States, the virus is now believed to be present in at least four communities in the Pacific Northwest - two in northern California, one in Oregon and one in Washington state - and authorities there are having to go well beyond the quarantine of infected travellers and tracing of close contacts, which until now had been the response.

Six people have died in the Seattle outbreak. The U.S. Centers for Disease Control and Prevention lists more than 90 cases across the United States, a large bulk of them patients repatriated from the Diamond Princess cruise liner that had been quarantined in Japan.

Iran reported infections rising to 1,501, with 66 deaths, including a senior official.

The death toll in Italy jumped to 52 on Monday from 34 the day before and the total number of confirmed cases in Europe's worst-affected country climbed past the 2,000 mark.

Germany reported 31 new infections, taking its tally to 188.