Leading world economies pressed the United States on Sunday to act decisively to avert a rush of spending cuts and tax hikes, warning that the so-called fiscal cliff is the biggest short-term threat to global growth.
Unless a fractious Congress can move swiftly to reach a deal after the US elections, about $600 billion in government spending cuts and higher taxes are set to kick in from January 1 and could push the US economy back into recession.
"If the US fails to resolve the fiscal cliff it would hit the US economy hard as well as the world and the Japanese economy, so each G20 country will urge the US to firmly deal with it," Bank of Japan governor Masaaki Shirakawa said before a meeting of Group of 20 finance ministers and central bankers.
The euro crisis, which erupted more than two years ago, has eased after the European Central Bank said in September it was ready to buy more government debt.
But investors are edgy about when or whether Spain will request an international bailout and how Greece's deep financial problems can be fixed.
Meanwhile, in a move that could revive tensions with the US, Germany was pressing other countries on Sunday for new commitments on deficit and debt reduction targets beyond 2016.
Germany, which has faced criticism for its insistence on belt-tightening to restore confidence in the world economy, came to the meeting saying the US and Japan shared as much responsibility as Europe for ensuring global economic stability.