Opening the two-day meeting of the Group of 20 finance ministers and
central bankers on Saturday, Australian Treasurer Joe Hockey said
support was building for setting a numerical goal for growth.
"I have a great sense of hope that this G20 meeting will be able to
lay down a real and tangible framework for an increase in the growth
of the global economy over the next five years," said Hockey, who is
hosting the Sydney gathering.
If adopted, the plan would mark a departure for the G20, as previous
attempts to set fiscal and current account targets have dissolved
into bickering. And while a target would largely be aspirational, it
would mark a sea change from recent meetings where the debate was
all about growth versus budget austerity.
France's finance minister, Pierre Moscovici, welcomed a goal of
lifting world growth by a total of 2.5 percentage points over five
years, calling it ambitious but "not unrealistic".
A G20 source said the Germans had withdrawn their opposition to
setting an overall target, as long as there were no goals imposed
for individual states.
However, not all the German camp seemed to be happy, with Jens
Weidmann, head of the country's central bank, saying quantitative
targets were "problematic in my view".
And Nhlanhla Nene, South Africa's Deputy Finance Minister, said
there was still a lot of work to be done.
"For us, whatever the target is, if that target doesn't talk to our
issues of dealing with inequality, unemployment, dealing with our
growth, but also looking at the broader integration and making sure
that we have a stable environment at the global level in which to
operate, unless they talk to that it wouldn't mean anything to us,"
The plan borrows wholesale from an International Monetary Fund paper
prepared for the G20 meeting which estimated that structural reforms
would raise world growth by about 0.5 percentage point per year over
the next five years, boosting global output by $2.25 trillion.
The IMF has forecast global growth of 3.75 percent for this year,
accelerating to 4 percent in 2015.
The laundry list of reforms run the usual gamut of liberalizing
product and labor markets, lowering barriers to trade, attracting
more women into the workforce and boosting investment in
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"While the gains stem mostly from policies that countries need to
implement for their own good, joint action could produce beneficial
growth spillovers in the longer term," was the IMF's argument for
pressing on with action.
Still there were no details on how or whether the G20 would police
each country's progress on the reforms, many of which would likely
be politically unpopular at home.
The onus would be on the rich nations to pick up the baton on growth
from the developing countries, who had carried the world economy in
the wake of the global financial crisis.
The emerging members have also been pressing for the U.S. Federal
Reserve to try to avoid sparking market volatility through better
messaging as its throttles back on asset buying.
There was never much expectation the Fed would consider actually
slowing the pace of tapering, but its emerging peers were hoping for
more cooperation on policy.
"I think if there was a "no surprises policy" in relation to
monetary policy, and that central banks around the world have
reasonable warnings of what may be events that do create market
volatility, then I think that is not unreasonable," said Australia's
Others were not so sure.
"I am skeptical about coordination in monetary policy within the
G20", said the Bundesbank's Weidmann, emphasizing that every central
bank had to act according to their own mandate.
(Additional reporting by Cecile Lefort,
Ian Chua, Matt Siegel, Jan Strupczewski; editing by John Mair)
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