Friday 6 September 2013

G20 warns global recovery ‘too weak’, shadowed by risks

G20 leaders
warned on Friday that global economic
recovery is too weak, with the risk of a
further slowdown and some emerging
markets showing particular fragility. And they backed a “Saint Petersburg action
plan” to boost growth and employment. In a reference to concerns by emerging
markets about the tapering of stimulus
programmes, they vowed that future
changes to monetary policy settings will be
“carefully calibrated and clearly
communicated”. “Despite our actions, the recovery is too
weak, and risks remain tilted to the
downside,” the leaders said in their final
communique after their two-day meeting in
Saint Petersburg shadowed by the Syria
crisis. “Global growth prospects for 2013 have
been marked down repeatedly over the last
year, global rebalancing is incomplete,
regional growth disparities remain wide, and
unemployment, particularly among youth,
remains unacceptably high,” the statement said. While there are signs of recovery in the euro
area and growth has continued in emerging
market economies, it has slowed down in
developing countries, it added. The statement appeared to recognise the
need for central banks such as the US
Federal Reserve eventually to end their
monetary easing policies. “We remain mindful of the risks and
unintended negative side effects of
extended periods of monetary easing,” it
said. But it also added: “Our central banks have
committed that future changes to
monetary policy settings will continue to be
carefully calibrated and clearly
communicated.” In a meeting dogged by differences over the
conflict in Syria, the leaders of the world’s
top developed and emerging nations put an
unified emphasis on growth and job
creation. The statement endorsed a “Saint
Petersburg action plan” aimed at
stimulating growth and creating jobs. “Our most urgent need is to increase the
momentum of the global recovery,
generate higher growth and better jobs,
while strengthening the foundations for
long-term growth,” the communique said. Countries should also avoid “policies that
could cause the recovery to falter or
promote growth at other countries’
expense. The currencies of Brazil and India have been
under serious pressure due to expectations
that the US Fed will taper its stimulus
programme while growth has been slowing
even in China’s powerhouse economy. “The priority is growth and jobs.
Sustainable growth and decent growth,”
said European Commission chief Jose
Manuel Barroso. “There is a growing consensus about what
needs to be done,” he said. “Jobs are the key,” added British Prime
Minister David Cameron at a session on the
labour market. “Jobs are what the citizens
want to see,” he added. Host Russian President Vladimir Putin said
at the second plenary session of two-day
meeting that the priority for the G20 had to
be to tackle the most acute problems of
youth unemployment and long-term
structural unemployment. “The task of investing in economic growth
and the creation of jobs is at the top of the
G20 agenda this year,” he said. Putin told the opening session of the
summit on Thursday that while the world’s
economic problems were less sharp than a
year ago when the euro zone debt crisis was
at its peak “it is however too early to relax”. He said he shared the concern about the
unwinding of stimulus programmes like that
of the US Fed which had helped emerging
markets to prosper. “But such a policy of handing out free
money, and we understand this well, cannot
last forever,” Putin said. The US stimulus freed up money that
investors then ploughed into emerging
markets. But now the risk that this liquidity
may recede is triggering major outflows and
sharply depreciating emerging market
currencies. The BRICS group of the world’s leading
emerging markets — Brazil, Russia, India,
China and South Africa — at a mini summit
ahead of the G20 urged the United States
on Thursday to show caution in any
tapering of its economic stimulus. French Economy and Finance Minister Pierre
Moscovici told AFP that compared to
previous meetings that were dominated by
the eurozone crisis “today the emphasis is
being placed on growth and employment”. He said that “what the G20 wants to create
here are the conditions for a consistent
recovery,” adding that the meeting had
been more consensual than in the past.

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