A WEAKENING outlook for much of the global economy means Japan and Europe are unlikely to be accused at this week’s Group of 20 (G20) Leaders Summit of starting a currency war, despite recent monetary policy moves that have devalued the yen and the euro.

    As the G20 leading industrialized countries struggle to make progress toward a goal of adding 2 percentage points to world growth by 2018, the latest quantitative easing rounds are likely to escape harsh criticism.

    “There is a more level-headed approach applying here than was the case a few years ago when G20 members were a lot more vocal in criticizing each other,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

    “The reality also is that Japan has been in the doldrums for 20-odd years, in and out of recession, and to do something about it they have to reflate their economy and that requires easier monetary policies,” Oliver added. “If a weaker yen is part of it, then that is the cost that has to be paid.”

    The weakening of the yen follows a decision last month by the Bank of Japan to dramatically expand its debt-buying stimulus drive. That pushed down bond yields and sent the yen to 115.52 against the dollar last week, its weakest in seven years.

    The European Central Bank, meanwhile, announced an expansionary “new phase” of monetary policy early last month. The dollar last week reached a four-and-a-half year high against the euro.

    Yet while the United States faced a barrage of complaints from the G20 grouping four years ago when its own quantitative easing policy led to a significant devaluation in the dollar, it is not expected to retaliate this time around.

    With the United States emerging as the star of an otherwise slumping global economy, it can afford to be magnanimous.(SD-Agencies)