Finance ministers and central bankers from the G20 have said they will take action to boost their collective economic output by an additional 2 per cent over the next five years as they seek to bring down unemployment rates in the rich world and to accelerate development in poorer states.
The pledge, which would lift global GDP by around $2 trillion (£1.2 trillion) over present forecasts, was the centrepiece of the international group’s communiqué at the culmination of its latest meeting in Sydney. The participants, who included the Chancellor, George Osborne, and the Bank of England Governor, Mark Carney, pledged to present “ambitious and realistic policies” at the full G20 leaders’ conference later this year in Brisbane. The nations of the G20, which was formed in 2008 in response to the global financial crisis, includes rich countries as well as the giants of the developing world, and accounts for 85 per cent of the world’s GDP.
The US Treasury Secretary, Jacob Lew, said the agreement would help the world “turn the next page” in the global economic recovery from the international financial crisis. The Australian Finance Minister, Joe Hockey, called the pledge “unprecedented”, and added: ”We are putting a number to it for the first time.”
The communiqué said that G20 members would take “concrete action … to increase investment, lift employment and participation, enhance trade and promote competition”.
The Japanese Prime Minister, Shinzo Abe, has already pledged to increase the number of women in work in his country as part of his radical “Abenomics” reform package. And other nations are expected to reiterate their own existing economic plans later this year in order to claim that they will hit the G20 target. The European Union and the United States, for instance, are currently negotiating an ambitious new free trade deal known as the Transatlantic Trade and Investment Partnership.
Even some participants in the meeting in Sydney appeared to sound a note of scepticism about the pledge. “It is kind of ambitious to set a numerical target for the whole world,” said the president of the European Central Bank, Mario Draghi.
Nevertheless, the objective was welcomed by the managing director of the International Monetary Fund, Christine Lagarde, who said: “This goal is attainable and is in line with IMF analysis presented to the G20 this week. Measures to support investment, boost trade, and promote competition will be essential for more sustainable and robust growth.”
The meeting followed severe turbulence in emerging markets as a result of the Federal Reserve’s tapering of its monetary stimulus programme – and the American central bank has drawn criticism from the Indian central bank governor, Raghuram Rajan. The communiqué noted the “excessive volatility” this had caused, but in the communiqué members only pledged to be “mindful” of spillover impacts and for policy changes to be “carefully calibrated and clearly communicated”.