Another historic conference was put together at Ise-Shima in Japan on May 26th and 27th 2016. The summit brought together the G7 leaders- Japan, United Kingdom, United State, Canada, Italy, France, and Germany. The president of European Union, a welcome member since 1981, was also present, in addition to a number of guest countries. The 42nd G7 summit was the last for President Barrack Obama and the first for Canada Prime Minister, Justin Trudeau to attend. The two-day summit had Shinzo Abe, japan prime minister as the leadership of the meeting with the agenda to proffer ways to tackle the current burgeoning global crisis that stands as threat to global development.
The 42nd G7 summit addressed a list of pressing global issues affecting the international comity. Against the backdrop of growing uncertainty in the global economy resulting from slowdowns in emerging markets and sharp drop in oil price; epidemic diseases affecting global health; women empowerment; energy decline and climate change; plus other issues that pose global risks including terrorism; nuclear program; territorial disputes in Eastern Europe and maritime threats in South China Sea in addition to Britain exit from the European Union, the leaders of G7 had plenty to discuss.
The outcome of the two-day meeting presents several critical takeaways for observers with regards to international politics. The G7 leaders recognize that “growth remains moderate and uneven, and downside risks to the global outlook have increased”. Hence, they advocated for careful and coordinated use of the fiscal stimulus, monetary policy, and structural reform as ways to bolster growth. They vowed to abolish protectionism and promote neoliberalism in trade as means of encouraging businesses looking for new opportunities in global markets.
In the final declaration, the G7 leaders made unequivocal blame on china for subsidizing the steel market calling it ‘’an art of distortion contributing to global excess capacity’’. By implication, they hinted that strong retaliatory measure is underway for China.
Likewise, the summit addressed security threats around migration, terrorism and refugee. The leaders, first, condemned the Paris and Brussels attacks with strong worded statements. They propose counter-terrorism cooperation among the G7 members as means of combating onslaught from abroad. The G7 further renewed commitment to strengthen the security environment for businesses operating in member economies. The summit’s final declaration call for coordinated action amongst the EU states to cope with the immediate humanitarian crisis, highlighting that more efforts should be on dealing with the ‘’root causes’’ of war in Syria and Iraq. Substantively, a new pledge of $4.03 billion was made to improve domestic stability and security in Iraq.
The conference further considered the growing territorial tension in Ukraine and South China Sea and its implication on international security. The G7 declaration denounced Russia’s destabilization of Ukraine and China’s provocative maritime activity in South China Sea. The meeting presents a unified front against Chinese and Russian revisionism and a further confirmation of the agreement to maintain the rules-based order that undergirds European and Asian prosperity.
The summit also echoed the commitment to support Women empowerment, protection of maternal health and newborn child and the Paris Agreement on climate change. It stressed on the need to curtail the spread of diseases, a pressing transnational challenge. The G7 nations are a leading figure in gender equality, women empowerment, good health care and they vowed to further commit resources to research and development in these areas
On a final note, the G7 weighed in on Brexit and Japan’s monetary policy. United States and Japan have growing disagreements on whether Japanese Yen should be devalued. Barrack Obama cautioned against both competitive devaluation and excessive exchange rate movement. On Brexit, the meeting strongly discouraged the UK from exiting the EU claiming it would undermine the economic integration to the detriment of all parties.
At large, the G7’s 42nd summit reflects a positive outlook to investors in many ways. First, the liberal economic policies and free trade advocated for is a recipe for stronger economic growth. Second, the proposed fund for global health and restructuring of Iraq is good news for investors concerned about the uncertainty in the Middle East and the increasing global communicable diseases. More so, it illuminated several political risks that could spiral into trade barriers between China and the G7. And, needless to say, it spelled out the concerted effort to fights terrorism.
Nonetheless, investors should be conscious in their optimism because, say for instance, the pledges may require investors to keep a close eye to ensure that more concrete measures follow from these pledges. Also, the G7 leaders may face real difficulty galvanizing support for the principles and policies at home. Finally, some members of the G7 may be tempted to pass the buck either to US or to Middle Eastern States to stabilize the situation in Syria and Iraq.