Finance ministers and central bankers from the Group of 20 have said they will work to grow their collective gross domestic product (GDP) by two percent. The news came on the second day of the G20 talks in Sydney.
In a communiqué published after a two-day meeting in Sydney, the Group of 20 said it had set a goal for the next five years aimed at increasing global growth. Participants at the weekend conference hail from the 20 nations that account for roughly 85 percent of the world’s economy.
“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than two percent above the trajectory implied by current policies over the coming five years,” the statement said.
The impact of the US Federal Reserve’s tapering of its stimulus program on the markets of emerging nations received attention at the weekend conference. However, the question of how to create global growth took center stage, as Australian Treasurer Joe Hockey pushed for quantitative targets for the next five years.
The summit leader, Australian Treasurer Joe Hockey, said the measure would mean “over 2 trillion US dollars ( 1.46 trillion euros) more in real terms and will lead to significant additional jobs.”
To-do list of reforms
The goal proposed by Hockey stemmed from an International Monetary Fund paper prepared for the Sydney meeting. The IMF analysis estimated that if structural reforms were implemented, the global economy could grow by about 0.5 percentage points per year over the next five years. It forecast global growth of 3.75 percent for this year, going up to 4 percent in 2015.
The implementation of the necessary structural reforms for sustainable growth provided much fodder for the leaders in attendance over the weekend, as each nation would have develop its own plan to achieve the fiscal goals.
“If we want to have – not just job creation, but job security – then we all have a responsibility to undertake structural reform,” Hockey said.
These reforms include liberalizing product and labor markets, lowering trade barriers, bringing more women into the workforce,and boosting investment in infrastructure.
Hockey pushed through the deal in the face of some skepticism, notably from Germany, which has expressed reservations about the feasibility of setting such targets.
“What growth rates can be achieved is a result of a very complicated process,” Germany’s Finance Minister Wolfgang Schäuble said after the meeting.
“The results of this process cannot be guaranteed by politicians,” he added.
On Saturday, Germany Bundesbank President Jens Weidmann also voiced doubts about the summit leader’s goal setting, calling quantitative targets “problematic.”
kms/tj (AFP, Reuters)