Leaders pledge to grow the economy
Zuma commends outcome
GROUP of 20 (G20) leaders agreed to take measures that would boost their economies by a collective $2 trillion (R22 trillion) by 2018 as they battle patchy growth and the threat of a European recession.
Citing risks from financial markets and geopolitical tensions, the leaders said the global economy was being held back by lacklustre demand, according to their communique following a two-day summit that ended yesterday in Brisbane. The group submitted close to 1 000 individual policy changes that they said would lift growth and said they would hold each other to account to ensure they were implemented.
“There are some worrying warning signs in the global economy that are threats to us and our growth,” UK Prime Minister David Cameron said after the meeting ended. “If every country that has come here does the things they said they would in terms of helping to boost growth,” including trade deals, then growth will continue, he said.
Action to bolster growth comes as policies around the world are diverging with the US tapering its monetary easing as it boasts the strongest economy among advanced nations, while Europe and Japan add further stimulus to ward off deflation. The International Monetary Fund (IMF) last month cut its projection for world economic growth next year to 3.8 percent.
President Jacob Zuma commended the outcome of the summit where the focus was a commitment to lift the G20’s gross domestic product (GDP).
We need to accelerate infrastructure development, especially in Africa.
“Australia, as the current chair of the G20, has kept the agenda of the summit focused on issues related to the global economy, development, growth and trade. In order to sustain global growth, we need to, amongst others, accelerate infrastructure development, especially in Africa.
“This will help lift intra- Africa trade and contribute immensely toward enabling our continent to industrialise and to create jobs in high-value sectors, so that Africa can produce value-added manufactured goods,” he said.
The mostly structural policy commitments spelled out in each country’s individual growth strategy include China’s plan to accelerate construction of 4G mobile communications networks, a A$476 million (R4.6 billion) industry skills fund in Australia and 165 000 affordable homes in the UK over four years.
IMF managing director Christine Lagarde yesterday told the leaders that in order to avoid the “new mediocre” of low growth, low inflation, high unemployment and high debt, all tools should be used at all levels.
“That includes not just monetary policy, which is being significantly used, particularly in the euro zone, but also fiscal policy, structural reforms and, under certain conditions, infrastructure,” she said.
The IMF and the Organisation for Economic Co-operation and Development assessed the policy commitments and said they would raise G20 GDP by an additional 2.1 percent from current trajectories by 2018, according to the communique.
“It’s a worthy objective for the G20 as global growth is still lagging,” said Shane Oliver, a Sydney-based head of investment strategy at AMP Capital Investors, which manages about $125bn. “But a lot of those measures might not be fully implemented and, even if they do, they may not deliver the results.”
The G20 also agreed to establish a global infrastructure hub, based in Sydney, with a mandate of four years that would encourage the exchange of information among governments, the private sector, development banks and other inter- national organisations, according to the communique.
“With the global economy struggling with an uneven recovery, we welcome G20 leaders’ commitment to raising growth and delivering quality jobs,” World Bank president Jim Yong Kim said.
“G20 leaders have rightly identified investment in infrastructure as crucial to lifting growth, creating jobs and tackling poverty.”
IMF reform to give emerging economies more equal representation remains a priority and leaders are “deeply disappointed” with delays in implementing changes agreed in 2010.
GROUP of 20 (G20) leaders wrapped up an annual summit yesterday with a vow to reinvigorate the global economy, but geopolitical frictions sparked anew as Russian President Vladimir Putin brushed off Western anger over Ukraine.
Host Tony Abbott insisted that everyone including Putin “who left the Brisbane summit a little early” was on board the campaign to enact reforms that could infuse more than $2 trillion (R22 trillion) into the global economy.
“I’m happy to be on a unity ticket with Vladimir Putin on that subject,” the Australian prime minister said after the summit.
Nevertheless, Abbott insisted that he had had “very robust” discussions with Putin on the summit sidelines, and described the July downing of a Malaysia Airlines plane over Ukraine as “one of the most terrible atrocities of recent times”.
Putin broke protocol by delivering remarks to the media before the host leader’s closing news conference, and then flew out shortly before the summit formally closed.
The Russian strongman said “some of our views do not coincide, but the discussions were complete, constructive and very helpful”.
But Western pressure redoubled earlier yesterday with a joint declaration from the US, Australia and Japan.
The trio’s leaders said in Brisbane that they were united in “opposing Russia’s purported annexation of Crimea and its actions to destabilise eastern Ukraine, and bringing to justice those responsible for the downing of Flight MH17”.
The West says the Malaysia Airlines plane was shot down by pro-Russian rebels in eastern Ukraine. Moscow angrily denies the charges. The plane was carrying 298 people, including 38 Australian citizens and residents.
Australian Foreign Minister Julie Bishop said Putin had come “under quite some pressure” from a number of G20 leaders because of the downing of MH17 and Russia’s behaviour towards Ukraine.
The Group of 20 nations found agreement in vowing to “extinguish” the Ebola outbreak “albeit without any promise of hard cash” as it works to reboot growth in the world economy after the shock of the 2008 financial crisis.
German Chancellor Angela Merkel, who held lengthy, latenight bilateral talks with Putin in Brisbane on Saturday, said: “It’s clear that geopolitical tensions, including relations with Russia, are not really conducive to promoting growth.”
The leaders also backed efforts to squeeze out loopholes between different tax regimes that allow some multinationals to get away with paying only a pittance on their profits. The issue has resurfaced after allegations that Luxem- bourg was conniving with such companies to the detriment of their home countries at a time when Jean-Claude Juncker, now the European Commission president, was its prime minister.
The G20 endorsed a “common reporting standard” so that companies cannot arbitrage differences between tax regimes.
The summit declaration also endorsed “strong and effective action” on climate change despite attempts to prevent its mention by Abbott, who doubts the scientific consensus that mankind’s actions are heating up the planet.
And the leaders threw their support behind the UN’s Green Climate Fund, which is aimed at helping poorer countries deal with the problem. The fund this week won a pledge of $3 billion from US President Barack Obama and $1.5bn from Japan.
One diplomat likened the G20 negotiations with Abbott to “trench warfare”, but then Obama breathed new life into global discussions on greenhouse emissions with a surprise pact with China last week. – Sapa-AFP
Australian Prime Minister Tony Abbott shakes hands with President Jacob Zuma as he officially welcomes leaders to the G20 summit in Brisbane at the weekend.