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23 Feb 2014
G20 communique commits to $2 trillion in additional output
FXStreet (Bali) - The meeting of Finance Ministers and Central Bank Governors which took place in Sydney (Australia) over the weekend, as part of the G20 gathering, emphasized the necessity for faster global economic growth rates in the final communique.
One of the most significant conclusions was the goal "to lift collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming 5 years; this is over US$2 trillion more in real terms and will lead to significant additional jobs."
In order to achieve this, the G20 communique explained, "we will take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies."
Main conclusions - G20 communique
"We welcome recent signs of improvement in the global economy, in particular, growth strengthening in the United States, United Kingdom and Japan alongside continued solid growth in China and many emerging market economies, and the resumption of growth in the euro area. Some key tail risks have diminished."
"Despite these recent improvements, the global economy remains far from achieving strong, sustainable, and balanced growth. We agree the global economy still faces weaknesses in some areas of demand, and growth is still below the rates needed to get our citizens back into jobs and meet their aspirations for development. Recent volatility in financial markets, high levels of public debt, continuing global imbalances and remaining vulnerabilities within some economies highlight that important challenges remain to be managed."
"We recognise that monetary policy needs to remain accommodative in many advanced economies, and should normalise in due course, with the timing being conditional on the outlook for price stability and economic growth. This eventual development would be positive for the global economy and reduced reliance on easy monetary policy would be beneficial in the medium term for financial stability. In a transition phase, economic policy could help with measures to increase private sector demand, including investment. We all stand ready to take the necessary steps to maintain price stability, by addressing in a timely manner deflationary and inflationary pressures. All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy."
"As markets react to various policy transitions and country circumstances, asset prices and exchange rates adjust. This might sometimes lead to excessive volatility that can be damaging to growth. While many economies are prepared for this, our primary response is to further strengthen and refine our domestic macroeconomic, structural and financial policy frameworks. Exchange rate flexibility can also facilitate the adjustment of our economies. Some economies may need to rebuild fiscal buffers where policy space has eroded. We will consistently communicate our actions to each other and to the public, and continue to cooperate on managing spillovers to other countries, and to ensure the continued effectiveness of global safety nets."
"We will continue to implement our fiscal strategies flexibly to take into account near-term economic conditions, so as to support economic growth and job creation, while putting debt as a share of GDP on a sustainable path. We will continue to work on improving these as part of our growth strategies."
We are committed to creating a climate that facilitates higher investment, particularly in infrastructure and small and medium enterprises. This is crucial for the global economy’s transition to stronger growth in the short and medium term. We will undertake reforms to remove constraints to private investment by establishing sound and predictable policy and regulatory frameworks and emphasising the role of market incentives and disciplines. These, along with other actions to promote long-term private sector investment, maximise the impact of public sector capital expenditure, and enhance the catalytic role of multilateral development banks will be an important part of our growth strategies and the Brisbane Action Plan."
One of the most significant conclusions was the goal "to lift collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming 5 years; this is over US$2 trillion more in real terms and will lead to significant additional jobs."
In order to achieve this, the G20 communique explained, "we will take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies."
Main conclusions - G20 communique
"We welcome recent signs of improvement in the global economy, in particular, growth strengthening in the United States, United Kingdom and Japan alongside continued solid growth in China and many emerging market economies, and the resumption of growth in the euro area. Some key tail risks have diminished."
"Despite these recent improvements, the global economy remains far from achieving strong, sustainable, and balanced growth. We agree the global economy still faces weaknesses in some areas of demand, and growth is still below the rates needed to get our citizens back into jobs and meet their aspirations for development. Recent volatility in financial markets, high levels of public debt, continuing global imbalances and remaining vulnerabilities within some economies highlight that important challenges remain to be managed."
"We recognise that monetary policy needs to remain accommodative in many advanced economies, and should normalise in due course, with the timing being conditional on the outlook for price stability and economic growth. This eventual development would be positive for the global economy and reduced reliance on easy monetary policy would be beneficial in the medium term for financial stability. In a transition phase, economic policy could help with measures to increase private sector demand, including investment. We all stand ready to take the necessary steps to maintain price stability, by addressing in a timely manner deflationary and inflationary pressures. All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy."
"As markets react to various policy transitions and country circumstances, asset prices and exchange rates adjust. This might sometimes lead to excessive volatility that can be damaging to growth. While many economies are prepared for this, our primary response is to further strengthen and refine our domestic macroeconomic, structural and financial policy frameworks. Exchange rate flexibility can also facilitate the adjustment of our economies. Some economies may need to rebuild fiscal buffers where policy space has eroded. We will consistently communicate our actions to each other and to the public, and continue to cooperate on managing spillovers to other countries, and to ensure the continued effectiveness of global safety nets."
"We will continue to implement our fiscal strategies flexibly to take into account near-term economic conditions, so as to support economic growth and job creation, while putting debt as a share of GDP on a sustainable path. We will continue to work on improving these as part of our growth strategies."
We are committed to creating a climate that facilitates higher investment, particularly in infrastructure and small and medium enterprises. This is crucial for the global economy’s transition to stronger growth in the short and medium term. We will undertake reforms to remove constraints to private investment by establishing sound and predictable policy and regulatory frameworks and emphasising the role of market incentives and disciplines. These, along with other actions to promote long-term private sector investment, maximise the impact of public sector capital expenditure, and enhance the catalytic role of multilateral development banks will be an important part of our growth strategies and the Brisbane Action Plan."