G20 pledges to strengthen global economy
Facing the debt crisis in Europe that threatens to affect markets worldwide, G20 world leaders who concluded their annual meeting in Los Cabos, Mexico, on Tuesday, June 19, were left with two different choices to ease the scenario: Spend more to try to stimulate growth or cut federal budgets in a bid to restore investor confidence.
It has been made clear at the summit that the success of the G20 nations* is depending on how Europe tackles its debt issues. However, as the leaders gathered in Mexico to reassure the world that they would find a way to end the crisis, they did not come to any major decisions and only released a general statement that they “will act together to strengthen recovery and address financial market tensions.”
The G20 statement did not mention any specific actions. It says that euro area leaders “will take steps to improve the functioning of financial markets” and also “attempt to break the feedback loop between sovereigns and banks.”
However, the G20 leaders reiterated their commitment to sustainable economic growth and reducing unemployment and also pledged to foster international trade and avoid protectionist policies.
Details of the G20 communique
Growth
The G20 leaders said that “strong, sustainable and balanced growth remains the top priority of the G20. Members will take the necessary actions to strengthen global growth and restore confidence.”
Euro Zone
Germany, France and Italy pledged to “take all necessary policy measures to safeguard the integrity and stability” of the eurozone. They declared their intention to strengthen eurozone integration, including moving toward a eurozone banking union.
Prices
“G20 members will remain vigilant of the evolution of oil prices and will stand ready to carry out additional actions as needed,” the statement says.
Global Balance
The group acknowledged progress on rebalancing heavily skewed global trade, noting that countries with large current account surpluses had moved to increase domestic demand, while those with deficits had acted to boost national savings.
Protectionism
G20 leaders said they are “deeply concerned” about rising instances of protectionism around the world. “We are firmly committed to open trade and investment, expanding markets and resisting protectionism in all its forms, which are necessary conditions for sustained global economic recovery, jobs and development.”
* G20 members are: Argentina, Australia, Brazil, Canada, China, European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK, US.
The group represents 90 per cent of the global GDP, 80 per cent of trade, and two thirds of the world’s population.
[caption id="attachment_3479" align="alignleft" width="300" caption="Mexico's president Felipe Calderon holds the closing speech of the G20 summit on June 19."][/caption] Facing the debt crisis in Europe that threatens to affect markets worldwide, G20 world leaders who concluded their annual meeting in Los Cabos, Mexico, on Tuesday, June 19, were left with two different choices to ease the scenario: Spend more to try to stimulate growth or cut federal budgets in a bid to restore investor confidence. It has been made clear at the summit that the success of the G20 nations* is depending on how Europe tackles its debt issues. However,...
Facing the debt crisis in Europe that threatens to affect markets worldwide, G20 world leaders who concluded their annual meeting in Los Cabos, Mexico, on Tuesday, June 19, were left with two different choices to ease the scenario: Spend more to try to stimulate growth or cut federal budgets in a bid to restore investor confidence.
It has been made clear at the summit that the success of the G20 nations* is depending on how Europe tackles its debt issues. However, as the leaders gathered in Mexico to reassure the world that they would find a way to end the crisis, they did not come to any major decisions and only released a general statement that they “will act together to strengthen recovery and address financial market tensions.”
The G20 statement did not mention any specific actions. It says that euro area leaders “will take steps to improve the functioning of financial markets” and also “attempt to break the feedback loop between sovereigns and banks.”
However, the G20 leaders reiterated their commitment to sustainable economic growth and reducing unemployment and also pledged to foster international trade and avoid protectionist policies.
Details of the G20 communique
Growth
The G20 leaders said that “strong, sustainable and balanced growth remains the top priority of the G20. Members will take the necessary actions to strengthen global growth and restore confidence.”
Euro Zone
Germany, France and Italy pledged to “take all necessary policy measures to safeguard the integrity and stability” of the eurozone. They declared their intention to strengthen eurozone integration, including moving toward a eurozone banking union.
Prices
“G20 members will remain vigilant of the evolution of oil prices and will stand ready to carry out additional actions as needed,” the statement says.
Global Balance
The group acknowledged progress on rebalancing heavily skewed global trade, noting that countries with large current account surpluses had moved to increase domestic demand, while those with deficits had acted to boost national savings.
Protectionism
G20 leaders said they are “deeply concerned” about rising instances of protectionism around the world. “We are firmly committed to open trade and investment, expanding markets and resisting protectionism in all its forms, which are necessary conditions for sustained global economic recovery, jobs and development.”
* G20 members are: Argentina, Australia, Brazil, Canada, China, European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK, US.
The group represents 90 per cent of the global GDP, 80 per cent of trade, and two thirds of the world’s population.
Austerity measures will be counter productive, depression does not lead to productivity