Finance ministers and central bank governors from G20 nations weighed the potential impact of the coronavirus epidemic on the world economy as they met in Riyadh on Saturday for a two-day gathering.

At the meeting in Saudi Arabia, the first Arab nation to hold the G20 presidency, financial leaders from the world’s top 20 economies are also seeking consensus on ways to achieve a global taxation system for the digital era.

The gathering comes amid growing alarm over the new coronavirus as Chinese authorities lock down millions of people to prevent the spread of the disease, with major knock-on effects for the global economy.

The virus has now claimed 2,345 lives in China, cutting off transportation and forcing businesses to close their doors.

The impact of the epidemic could see a “V-shaped” trajectory, with a sharp decline in China’s GDP followed by a sharp recovery, but the situation could have more dire consequences for other countries as the impacts spill over, said IMF chief Kristalina Georgieva.

At the core of discussions at the gathering is an action plan to shield the world economy − already facing a slowdown − from the impact of the outbreak, said French Finance Minister Bruno Le Maire.

“The question remains open: whether it will be a V-shape with a quick recovery of the world economy or whether it would lead to a L-shape with a persistent slowdown in world growth,” Le Maire told reporters.

“This is the key question.” China has said it will not be sending any leaders from Beijing for the Riyadh gathering, chaired by the the kingdom’s finance minister Mohammed Al Jadaan and central bank governor Ahmed Al Kholifey.

But it said the Chinese ambassador in the kingdom will instead lead a small delegation.

“We have been closely watching the developments of the virus and assessing its potential effects on economic growth,” a senior US Treasury official told reporters.

“We expect ministers and governors will discuss the global economic outlook, particularly as it relates to the coronavirus outbreak.” - ‘One solution’ - The G20 organisers also hosted a ministerial-level symposium on international taxation on Saturday, focused on the challenges arising from the digitalisation of the global economy.

“There is a consensus among the G20 members on the necessity of getting this new international taxation system for the sake of fairness and efficiency,” said Le Maire.

He added there was also consensus on a global framework for an international system while urging the gathered leaders to reach a compromise solution by the end of the year.

Last month, Britain said its planned digital tax on hugely profitable technology giants will proceed from April despite US threats of retaliatory tariffs.

“You cannot have in a global economy different national tax systems that conflict with each other,” US Treasury Secretary Steven Mnuchin told the Riyadh gathering.

Other European nations like Italy and Austria have already introduced their own digital levy, but France has put its plans on hold.

Presidents Emmanuel Macron and US Donald Trump have agreed to extend negotiations on the proposed French tax on digital giants to the end of the year, postponing Washington’s threat of sanctions against Paris, according to a French diplomatic source.

France has said it would drop its tax if an international agreement is reached under the auspices of the Organisation for Economic Cooperation and Development.

Meanwhile, Bank of Japan Governor Haruhiko Kuroda said on Saturday the yen’s recent declines were largely driven by a strong dollar, shrugging off some market views that the widening coronavirus epidemic is triggering an outflow of funds from Asia. Kuroda also said he had not changed his view that Japan’s economy would continue to recover moderately, suggesting that he saw no immediate need for the BoJ to expand stimulus.

“If needed, we will take additional monetary easing steps without hesitation,” he told reporters upon arriving at a Group of 20 finance leaders’ gathering in Riyadh.

“But the situation is still uncertain. I don’t think our scenario projecting a moderate economic recovery has been derailed.” The fallout from the coronavirus crisis has overshadowed the meeting of the world’s top economies kicking off on Saturday. Business disruptions in China are starting to spill over into the global economy, with parts shortages rippling through supply chains as far away as the United States.

The yen bounced back on Friday after suffering its worst two-day performance since 2017 on worries about the health of Japan’s economy, which has been hit by supply-chain disruptions and a plunge in Chinese tourists caused by the virus outbreak.

Kuroda dismissed views held by some market players that the yen could be losing its status as a safe-haven currency.

“When you look at recent developments, the dollar is strengthening against the yen, the euro and various currencies including those in Asia,” Kuroda said.

Agencies