February 22, 2014 10:33
Global growth is the focus of a meeting in Australia Saturday and Sunday of the world's most influential finance ministers. Members of the G20 grouping of industrialized nations are gathering in Sydney to discuss ways to sustain growth as the United States reduces its multi-billion dollar stimulus package.
The decision by the U.S. Federal Reserve to scale back a policy known as "quantitative easing" -- the printing of money to stimulate the economy -- will be a theme at the two-day Sydney conference.
It brings together finance ministers and central-bank governors from the G20 group of nations, although ministers from South Africa, Brazil, Italy, Mexico and the World Bank President will not be attending.
The winding down of the stimulus program in the United States has seen investors leave emerging markets, such as India and Indonesia, and bring their money back to the U.S.
There is much debate about whether recent volatility in emerging markets was the result of the Federal Reserve's decision.
The head of the International Monetary Fund, Christine Lagarde, said the domestic policies in developing countries should be sound to protect their economies.
"Mind the shop at home. In other words, emerging market economies, you need to look at your fiscal policy, you need to look at your monetary policy, you need to have the house in order to resist the volatility that can be induced by the tapering of the US Fed in part at the moment. But we're also saying to the US authorities, particularly the Fed be mindful of what's happening elsewhere when you do what you have announced," said Lagarde.
The host of the G20 meeting is keen to get an agreement on setting a global growth target, but that could be an area of disagreement. German officials are reportedly uneasy about setting binding goals for growth, insisting it would be an old-fashioned way to manage the global economy.
However, the Australian Treasurer, Joe Hockey, argued that financial markets across the G20 economies want certainty from governments as they confront continued volatility.
"The global economy cannot afford complacency. We have not got time for reform fatigue. We've seen some signs that the global economy is recovering. Growth in advanced economies, particularly in the United States and Japan looks to be picking up and the Euro area seems to be resuming growth again. But we're not out of the woods [out of danger] yet. The global economic recovery is not yet sufficiently strong or broadly based to create enough jobs and to continue lifting people out of poverty," said Hockey.
The Sydney meeting will also discuss ways to combat tax avoidance and how to inject private sector money into infrastructure projects.
The G20 accounts for 85 percent of global production, and two thirds of the world's population. Its aims are to conquer economic uncertainty, foster growth and create jobs.
The next G20 heads of government summit will be held in the Australian city of Brisbane in November.
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