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Be ready to face unexpected economic slowdown, EU to tell G20

BRUSSELS (Reuters) – European Union finance ministers will warn their counterparts from the world’s most industrialized nations they should get ready to face a potentially large global slowdown, an EU document seen by Reuters says.

The warning adds to concerns over the impact of the coronavirus outbreak in China whose death toll spiked on Thursday after a new testing method for infections was introduced in Hubei province, the epicenter of the epidemic.

Without explicitly mentioning the coronavirus, the EU will tell a G20 meeting of finance ministers next week that the world should get ready for unexpected bad news.

“The G20 should safeguard against downside risks and be ready to respond to a larger than expected slowdown,” the EU’s internal document says.

Earlier on Thursday the European Commission, the EU executive arm, said the coronavirus epidemic represented a key downside risk for economic growth, although its impact was difficult to gauge at the moment.

Global growth is estimated to have slowed in the last quarter of 2019, but is forecast to pick up speed this year.

The International Monetary Fund forecast in early January that world output would rise 3.3% this year, up from 2.9% in 2019 but down from its previous estimate of a 3.5% expansion.

The EU text will be adopted on Tuesday at a meeting of EU finance ministers before being distributed at a G20 meeting of finance ministers and central bank governors on February 20-23 in Riyadh.

“Global economic growth remains weak, amid signs of stabilization, in particular in global manufacturing,” the document says, adding that trade tensions remain elevated even after last months initial trade deal between the United States and China.

“Geopolitical tensions remain high. Resolving those tensions deserves the highest order of priority,” the document adds, urging the G20 to continue its work to address global imbalances.

(Reporting by Francesco Guarascio; Editing by Catherine Evans @fraguarascio)