Top financial policymakers from the world’s 20 most powerful nations gather this weekend in Japan as a protracted US-China trade war clouds the global economy with no end in sight.

G20 finance ministers and central bankers gathering in the southwestern Japanese port city of Fukuoka will also tackle the thorny conundrum of how to tax huge multinational digital firms like Google and Facebook.

Policymakers are facing an increasingly gloomy outlook as turbulence from broadening trade conflicts spills into the real economy, prompting several central banks to slash interest rates or signal looser monetary policy.

Just ahead of the meeting, the World Bank slashed its global growth forecasts for this year as confidence tumbles and investment is delayed by geopolitical headwinds, such as Britain’s exit from the EU.

The world economy is now expected to expand by 2.6 per cent this year, three tenths of a percentage point lower than its January forecast, and well below the three per cent growth seen last year, according to the Global Economic Prospects report.

By a quirk of the calendar, trade ministers are also meeting the same weekend in Japan but the finance ministers will be tackling the current tensions and their economic consequences, officials and analysts said.

Washington plans to press fellow G20 members to reduce trade imbalances, a senior US Treasury official said, echoing US President Donald Trump’s campaign to promote US exports.

“I do expect trade will be one of the topics of conversation … in terms of trying to open trade up further and reduce some of the unfair trade practices that may exist out there, as well as the impact of the assertive tariff measures that have been announced,” said the official.

The discussions in Fukuoka will feed into the G20 summit on June 28-29, where Trump and Chinese President Xi Jinping are expected to cross swords on trade amid a spiralling pattern of tit-for-tat trade tariffs.

‘Broad consensus’

Ministers and central bankers will also wrestle with a global push to impose a unified tax policy on internet giants that are enjoying booming sales but are criticised for not paying fair taxes.

The OECD will present ministers with a roadmap for a new tax policy, as the G20 reportedly moves toward a tax scheme based on the amount of business a company does in a country, not where it is based.

But the US is pushing for a broader approach that may also target European and Asian multinationals involved in sectors beyond technology.

“There is a broad consensus that the world’s existing taxation framework must be changed to suit current conditions,” said NLI Research Institute researcher Yosuke Nakamura.

“But when it comes to specifics, it becomes difficult to find an agreement like taxing multinational firms including the Gafa”, he said, referring to US-based Google, Amazon, Facebook, and Apple.

“Unless you bring the United States onboard, you cannot have any effective changes to the global taxation framework,” Nakamura added.

The G20 will also tackle a host of other pressing economic issues such as Brexit, the Chinese economy and slowing growth in Europe.