SYDNEY (Reuters) — The world's top
economies may agree to set an ambitious target for faster global growth
at a weekend meeting in Sydney, where major central banks are also being
urged to coordinate policies to avoid "surprises" that could further
roil emerging markets.
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 firm 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 be a departure for the G20, as previous
attempts to set fiscal and current account targets have faltered.
And while Canada's central bank chief Stephen Poloz called the goal
"aspirational" and doubts remain about its implementation, it would
give the group fresh focus and 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 Germany had dropped its 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, calling quantitative
targets "problematic".
And Nhlanhla Nene, South Africa's Deputy Finance Minister, said the
target would be meaningless unless issues faced by emerging
economies such as inequality, high unemployment, and volatile global
financial conditions were addressed.
IMF PLAN
The plan borrows wholesale from an International Monetary Fund paper
prepared for the Sydney 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 and
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
infrastructure.
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.
Olli Rehn, European Union's Economic and Monetary Affairs
Commissioner, said the bloc would back the growth target for the G20
group that accounts for 85 percent of global economic output
provided it came with a firm commitment to bold reforms.
He suggested that reform progress could be monitored by the IMF and
the Organization for Economic Cooperation and Development and that
EU's policy coordination and surveillance could serve as a model.
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
Hockey.
Others were not so sure, pointing out that troubles of hardest-hit
emerging economies, such as Brazil and Turkey, were largely
home-made and the Fed's tapering was in fact a good thing: a sign of
U.S. economy's improving health.
Even Indonesia, one of the "Fragile Five" major emerging economies,
said the Fed's gradual withdrawal of stimulus was not to blame for
all the ills of developing world.
"I have to admit that emerging markets should do their own
homework," Finance Minister Chatib Basri told Reuters.
(With reporting by Jane Wardell, Ian Chua, Matt Siegel, Jan
Strupczewski, Louise Egan, Leika Kihara; writing by Wayne Cole;
editing by Tomasz Janowski and Lincoln Feast)
