British Prime Minister David Cameron addresses a press conference at the conclusion of the G20 summit in Brisbane, Australia, Sunday, Nov. 16, 2014.Mark Baker/The Associated Press
Group of 20 leaders agreed to take measures that would boost their economies by a collective $2-trillion (U.S.) 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 is being held back by lacklustre demand, according to the communiqué issued following a two-day summit that ended Sunday in Brisbane, Australia. The group submitted close to 1,000 individual policy changes they said would lift growth. They also said they would hold one another to account to ensure the changes are implemented.
"There are some worrying warning signs in the global economy that are threats to us and our growth," British 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 from the United States, which boasts the strongest economy among advanced countries and has begun winding down some of its monetary easing. In contrast, Europe and Japan are adding further stimulus to ward off deflation. The International Monetary Fund last month cut its projection for world economic growth next year to 3.8 per cent.
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 $417-million industry skills fund in Australia and 165,000 affordable homes in the Britain over four years.
IMF Managing Director Christine Lagarde 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, she said at a press conference yesterday in Brisbane.
"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 Organization for Economic Co-operation and Development assessed the policy commitments and said they would raise G20 gross domestic product by an additional 2.1 per cent from current trajectories by 2018, according to the communiqué.
"It's a worthy objective for the G-20 as global growth is still lagging," said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which manages about $125-billion. "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 international organizations, according to the communiqué.
"With the global economy struggling with an uneven recovery, we welcome G-20 leaders' commitment to raising growth and delivering quality jobs," World Bank Group President Jim Yong Kim said in a statement. "G-20 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, according to the communiqué. The G20 urged the U.S. to ratify the changes, and said if it does not happen by the end of the year it would ask the IMF to provide other options, according to the communiqué.
Leaders of the BRICS nations – Brazil, Russia, India, China and South Africa – said Nov. 15 that delays in the IMF reform are "unjustifiable" and called on the G-20 to consider alternatives.