G20 keeps growth target despite wobbly world economy

November 17, 2015 08:13
G20 leaders applaud Turkish President Recep Tayyip Erdogan (center) during their summit. The leaders of the world's leading economies vowed to boost their collective GDP. Photo: Internet

World leaders agreed to lift their collective output by an extra 2 percent by 2018 despite uneven growth in the world economy.

The G20 leaders ended their meeting in Turkey by endorsing plans to address the refugee crisis, taxation, climate change, cyber security and inequality.

"We remain committed to achieving our ambition to lift collective G20 GDP by an additional 2 percent by 2018," the leaders said in a final communique.

"Our top priority is timely and effective implementation of our growth strategies that include measures to support demand and structural reforms."

The G20, a grouping of the world's leading economies, said it will "carefully calibrate" and "clearly communicate" policy decisions amid expectations of a US interest rate hike, possibly in December.

The communique, largely unchanged from the draft document reported by Reuters on Sunday, also emphasised previous exchange rate commitments and pledges to resist protectionism.

But at least one delegate noted the difficulty of coordinating policy at a time when growth is patchy, and economies diverge sharply.

"We have seen economic trends, as well as policies of major economies, have displayed different directions and it has become more necessary to coordinate macroeconomic policies," Wang Xiaolong, China's special envoy on G20 affairs, said.

"The difficulty in such coordination is also rising. We have seen that trade is declining as well as commodity prices which continue to fluctuate... and there have been some fluctuations on the financial markets."

Diverging monetary policy has been a thorny issue for financial markets and policymakers this year, as the US Federal Reserve looks likely to hike rates, while much of the rest of the world struggles to kick-start growth.

Expectations of a US hike have boosted the dollar, often to the detriment of emerging market currencies.

In sharp contrast to the United States, much of the rest of the world, including China, remains vulnerable.

The European Central Bank has underlined readiness to extend money printing to boost weak growth and inflation in the euro zone.

Data from Japan on Monday showed the world's third-largest economy slipped into a recession in July-September.

The leaders also endorsed measures to tackle corporate tax avoidance, although questions remain about whether countries will follow through on the plans or leave loopholes that multinationals can exploit.

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