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G-20 leaders strike balance between debt and growth
US President Barack Obama, China’s Hu Jintao and leaders from the rest of the Group of 20 economic powers gather for the fourth time since the financial crisis spilling out of the United States in 2007 fueled fears of a new Great Depression.
The G-20, spanning the emerging economic powers as well as the developed economies where the trouble started, united last year to throw trillions of dollars into the battle against recession. The group has since become the predominant forum for coordinating the tackling of global economic challenges.
With sluggish growth in many developed countries right now, Washington fears Europe’s drive to slash post-recession debt could derail the upturn, a worry also voiced by other G-20 leaders, including Indian Prime Minister Manmohan Singh. But Obama, like many of his counterparts, is also keen to preserve the unity of the G-20. The G-20 leaders are set to announce a concerted effort to halve public sector deficits within three years and stabilize government debt as well, but also recognize that the start of that process will take place at different speeds, according to a draft communique that Reuters obtained. The document acknowledges that after the downturn, the economic recovery varies in pace across the world and there is a delicate balance needed between restoring budget discipline and sustaining growth.
Indeed, the main source of growth now is not the most advanced economies but the likes of China and other large emerging market economies, which are also worried about the debt woes of the industrial countries. The aggregate debt of advanced countries within the G-20 is expected to hit 107.7 percent of GDP this year.
The G-20 leaders are also set to commit to tougher capital requirements for banks and welcome Beijing’s recent announcement it will shift to a more flexible exchange rate over time, the draft communique shows.
G-20 leaders drop Doha target
World leaders dropped a commitment on Saturday to complete the troubled Doha trade round this year and vowed to push forward on bilateral and regional trade talks until a global deal could be done. Leaders from the G-8, meeting north of Toronto, renewed a pledge to finish the World Trade Organization’s Doha round, which was launched nearly nine years ago, but they included no target date for completion.
Canadian Prime Minister Stephen Harper, who chaired the G-8 summit, said Doha was not dead.
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