G20 aims to lift GDP by extra 2pc in five years

February 24, 2014 - 12:56:38 am

German Finance Minister Wolfgang Schaeuble (left) with Deutsche Bundesbank President Jens Weidmann during the G20 Finance Ministers and Central Bank Governors meeting in Sydney yesterday.

SYDNEY: The world’s top economies have embraced a goal of generating more than $2 trillion in additional output over five years while creating tens of million of new jobs, signalling optimism that the worst of crisis-era austerity was behind them.

The final communique from the two-day meeting of Group 20 finance ministers and central bankers in Sydney said they would take concrete action to increase investment and employment, among other reforms. The group accounts for around 85 percent of the global economy.

“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than two percent above the trajectory implied by current policies over the coming five years,” the G20 statement said. 

Australian Treasurer Joe Hockey, who hosted the meeting, sold the plan as a new day for cooperation in the G20.

“We are putting a number to it for the first time — putting a real number to what we are trying to achieve,” Hockey said. “We want to add over $2 trillion more in economic activity and tens of millions of new jobs.”

The targeted acceleration would boost global output by  more than the world’s eight largest economy Russia produces in a year. The deal was also something of a feather in the cap of Hockey, who spearheaded the push for growth in the face of some scepticism, notably from Germany.

“What growth rates can be achieved is a result of a very complicated process,” Germany’s Finance Minister Wolfgang Schaeuble said after the meeting.

“The results of this process cannot be guaranteed by politicians.”

Australia is acting as president of the G20 this year, following Russia in 2013 and ahead of Turkey next year.

While shifting the focus to reforms that would lift and sustain global growth in years to come the group acknowledged that monetary policy would need to “remain accommodative in many advanced economies and should normalise in due course.”

The growth plan borrows wholesale from an IMF paper prepared for the Sydney meeting, which estimated that structural reforms would raise world economic output by about 0.5 percent per year over the next five years, boosting global output by $2.25 trillion.Reuters