By Maria Martinez
BERLIN, Sept 1 (Reuters) – Geopolitical uncertainty is weighing on global growth and G20 countries must work to reduce it, German Finance Minister Lars Klingbeil said on Tuesday.
“Uncertainty is poison for economic growth,” he said on the sidelines of a meeting of G20 finance ministers and central bank governors hosted by the U.S. in Asheville, North Carolina.
The Iran war, ongoing U.S. tariff disputes and China’s distortion of competition have all led to instability, Klingbeil added.
“The tariff conflicts being pursued by the U.S., such as the current dispute with Canada, destroy trust,” he said, adding that such spats ultimately hurt all parties and reduce prosperity worldwide.
Klingbeil said Germany supported a rules-based international order, international law and multilateralism.
“Germany stands for a world in which the rule of law prevails, rather than the law of the strong,” he said, adding that Europe should respond more forcefully when trading partners fail to follow agreed rules.
“We must protect our domestic industry, our economy and our jobs,” he said.
Despite higher prices due to the Iran conflict and the uncertainty described by Klingbeil, the German economy has shown resilience and grew by 0.3% in the second quarter.
Bundesbank President Joachim Nagel said momentum appears to be returning, adding: “The second half of the year could bring further positive developments.”
On inflation, Nagel highlighted the decline in euro zone core inflation and said there was no evidence of so-called second-round effects, in which higher prices feed through into wages and broader inflation.
Nagel said Germany’s debt and deficit ratios remain “very sound” compared with those of other countries but warned that policymakers would need to maintain fiscal discipline to preserve the country’s top-tier AAA credit rating.
“It is an issue that policymakers must keep in mind,” he said.
(Reporting by Maria Martinez; editing by Matthias Williams and Gareth Jones)
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