G20 to confront global risks

‘There is a lot at stake’ as countries convene in Istanbul

• Finance ministers and central bankers face a tough task coordinating action to spur global growth at G20 meetings this week, with major economies running at different speeds and monetary policies diverging.

Concern over the ability of the United States to sustain the global economy as most of the world slows will be high on the agenda as the Group of 20 leading economies hold talks in Istanbul on Monday and Tuesday.

The meetings come as Greece casts a new shadow over Europe, cheap oil plays havoc with inflation and growth forecasts and a strengthening U.S. dollar threatens emerging economies.

“There is a lot at stake,” International Monetary Fund Managing Director Christine Lagarde said in a blog post on Friday. “Without action, we could see the global economic supertanker continuing to be stuck in the shallow waters of sub-par growth and meagre job creation.”

Turkey’s Deputy Prime Minister, Ali Babacan, told an Institute of International Finance meeting on Sunday that tackling sluggish global growth and giving low income nations more voice will be among the priorities for Turkey’s G20 presidency.

The former will be easier said than done.

U.S. Treasury Secretary Jack Lew said last week the United States could not be “the sole engine of growth” and a senior U.S. official said Washington’s message going into the meetings would again be that Europe is not doing enough.

“Kick-starting global growth will be front and centre” at the G20 meetings, Canadian Finance Minister Joe Oliver said last week, citing the stalled eurozone, slowdowns in China and India and geopolitical crises in Ukraine, Iraq and Syria as key risks.

Coming good on pledges made at November’s G20 summit in Brisbane could add more than US$2 trillion to the global economy and create millions of new jobs over the next four years, Ms. Lagarde said.

The G20 put together a global stimulus package during the 2007-09 financial crisis but today’s challenge is more delicate, with diverging monetary policies a cause of global turbulence.

The U.S. Federal Reserve looks set to raise interest rates this year, a stark contrast to impromptu cuts from India to Australia, Canada to Denmark, as well as China’s cut in bank reserve requirements and the abrupt end to the Swiss franc cap.