The U.S. economy is recovering but economic growth across the world remains uneven, unemployment remains high, and more co-ordinated efforts are needed to encourage global growth and job creation in 2014, U.S. Treasury Secretary Jack Lew said as he addressed a Group of 20 gathering in Sydney.
Speaking at a Friday opening session before the G20 meeting of finance ministers and central bank governors starts on Saturday, Mr. Lew said the U.S. was focused on continuing the G20’s efforts on international financial reform, as well as trying to complete the stalled Trans-Pacific Partnership that would link a multitude of Pacific-facing countries – including Canada – in a trade pact.
“Further progress globally is needed to achieve faster and more balanced growth around the world,” Mr. Lew told a group of reporters. “Global growth remains uneven.”
Finance Minister Jim Flaherty and Bank of Canada Governor Stephen Poloz will also attend sessions this weekend. But with the global financial crisis behind all these fiscal and monetary policy makers, there are few hopes that any large market-moving events will happen at this G20 meeting of finance ministers and central bankers. Australian treasurer Joe Hockey, speaking beside Mr. Lew, stressed a small government agenda – saying governments have shouldered the burden of pulling the world out of a recession with massive stimulus packages and that now the onus for global growth is squarely on the private sector.
“The role of governments is to facilitate private sector growth,” Mr. Hockey said. “Ultimately, we are focused on economic growth and jobs. That’s what’s going to deliver the prosperity that the world needs and the world desires.”
Several observers have noted that this agenda is rather lukewarm given the bold, ambitious action that resulted from G20 meetings during the depth of the global financial crisis. But Australian Prime Minister Tony Abbott and Mr. Hockey have made an attempt to keep the G20 agenda free of additional clutter – rather than simply adding more and more ambitious items the G20’s lengthening priorities – and have instead focused on broad goals of encouraging growth, as well as non-binding suggestions on everything from tax reform to private sector infrastructure investment.
“Yawn!” wrote Carl Weinberg, chief economist at High Frequency Economics, in a research note yesterday. “Any grade-schooler could have made up Mr. Abbott’s list of priorities. It is a laundry list, not an agenda for fixing the global economy as it languishes in a sixth year of subpar performance.”
At the same time, the meeting is taking place after a sustained bout of volatility in emerging markets that was, in part, caused by capital outflows that resulted from the U.S. Federal Reserve’s drawback of its bond-buying stimulus package. India’s central banker has publically called for more coordinated global monetary action, but Janet Yellen, the Fed’s new chair, has made it clear that she will continue pulling back the stimulus as the U.S. continues to recover. “I’m sure there will be occasionally robust discussion in the room, “ Mr. Hockey said with a laugh.
Mr. Weinberg also notes that additional tension could come about if Mr. Hockey follows through on his attempt to get G20 countries to state specific growth targets for the coming year. “Pushback is inevitable,” Mr. Weinberg wrote.
The International Monetary Fund, in a document released just before the G20 began, noted that “the recovery is still weak and significant downside risks remain,” including continued vulnerabilities in emerging markets such as India and a continuing economic slowdown in China. The IMF, alluding to the disagreement between developed and developing world central bankers, said there is “scope for better cooperation” on withdrawing stimulus money in order to dampen the effects on emerging markets.
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