Lead­ers pledge to grow the econ­omy

Zuma com­mends out­come

The Star Early Edition - - BUSINESS REPORT - Ji­ten­dra Joshi

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.”

IMF re­form

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.

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