The G-20 group of nations has set an ambitious target of growing their economies at least by 2.1% by 2018, adding $2tn to the global economy and generating millions of the much-needed jobs in countries that are struggling with recession or very little growth.
At their recent meeting in Brisbane, Australia, the group of 20 large global economies also vowed to increase the participation of women in the global workforce, and crack down on tax avoidance by multi-national companies.
The G-20 also agreed to establish a global infrastructure hub, based in Sydney, Australia, with a mandate of four years that would encourage the exchange of information among governments, the private sector, development banks and other international organisations, according to the communique.
It’s a worthy objective for the G-20 as the global growth is still lagging.
While setting a target and working towards it is encouraging, many sceptics argue that the G-20 communique may be difficult to achieve, given that the commitments made under the auspices of the G-20 are, by nature, non-binding.
But the host of this year’s summit, Australian Premier Tony Abbott said the G20 group was fully committed to helping the global economy grow and enhance their collective GDP growth by at least 2.1%.
Clearly, the challenges before the global economy are huge. Many countries are battling patchy growth even as the world faces the threat of a major European recession. Also, growth has slowed down in five major emerging economies or Brics nations, with China, India, Brazil and Russia struggling to bolster it.
British Prime Minister David Cameron echoed the sentiments and said: “There are some worrying warning signs in the global economy that are threats to us and our growth. If every country that has come here does the things they said they would in terms of helping to boost growth, including trade deals, then growth will continue.”
The G-20 initiative to bolster global growth comes amid diverging policies around the world with the US tapering its monetary easing on the back of an economic recovery, even as Europe and Japan add further stimulus to ward off deflation.
It may be noted the International Monetary Fund (IMF) last month cut its projection for world economic growth to 3.8% in 2015.
At the Brisbane G-20 meeting, the mostly structural policy commitments spelled out in each country’s individual growth strategy include China’s plan to accelerate construction of 4G mobile communications networks, a $417mn industry skills fund in Australia and 165,000 affordable homes in the UK over a four year period.
Through their communique, the G-20 leaders have cautioned that the global economy can no longer afford a regime of low growth, low inflation, high unemployment and huge debt.
But economists stress the global economic malaise can no longer be treated by monetary tools alone. They affirm fiscal policy, structural and, under certain conditions, infrastructure reforms are very much required to tide over the current crisis and bolster global growth.
