G20 close to boosting world GDP by S$2.5t

CAIRNS — Finance chiefs from the 20 largest economies said yesterday they are close to reaching their goal of boosting world gross domestic product by more than US$2 trillion (S$2.5 trillion) over the next five years and will focus on infrastructure investment to help reach the target.

Australian Treasurer Joe Hockey, who hosted the Group of Twenty (G20) meeting in the northern Australian city of Cairns, said the G20 finance ministers and central bankers had agreed to more than 900 policy initiatives to meet the goal they set in February during a gathering in Sydney.

The G20, which represents about 85 per cent of the global economy, said an analysis of those initiatives show they should boost the combined GDP of member countries by 1.8 per cent above levels expected for the next five years — just short of the group’s target of 2 per cent.

In July, the International Monetary Fund (IMF) downgraded its economic forecast, estimating the world economy would expand 3.4 per cent this year, rather than the 3.7 per cent it had previously predicted, because of weaker growth in the United States, Russia and developing economies.

Last week, the lending organisation amped up pressure on the G20 to take action on its global growth commitment, calling for decisive structural reforms.

IMF managing director Christine Lagarde yesterday said the G20 would need to concentrate on labour market measures and infrastructure in order to reach its 2 per cent growth goal by 2018. “They are almost done, but need to do a bit more,” she told reporters after the meeting.

Mr Hockey said the group had agreed to shift its focus from government-led growth to private sector-led growth, particularly from additional investment in infrastructure. In a communique issued after the meeting, the G20 outlined a Global Infrastructure Initiative that would include the development of a database to help match potential investors with projects.

The group also warned that while economic conditions had improved in some key economies, global growth remained uneven and below the pace necessary to generate critically needed jobs. Mr Hockey said the group would deliver concrete outcomes by the time the main G20 summit is held in November in Brisbane, Australia.

“We will now redouble efforts and hold each other to account on meeting this target as we go forward,” he said.

The group represents the world’s major industrialised and developing countries. A common concern at the meeting was the risk of Europe’s economic malaise pulling others down.

US Treasury Secretary Jack Lew cited “philosophical” differences with some of his counterparts in Europe, especially on the need for near-term stimulus.

“The concern that I have is that if the efforts to boost demand are deferred for too long, there’s a risk that the headwinds get stronger and what Europe needs is some more tailwinds in the economy,” he said. AGENCIES