G-20 finance ministers and central bank governors have just concluded their Shanghai meeting with a pledge to use all possible means to boost growth and avoid competitive depreciation of currencies. As an important forum controlling 85 percent of the global GDP and over 80 percent of world trade, its decisions naturally attract attention.
However, looking back at the G-20 finance ministers' goal in 2014 to boost the global GDP by 2 percent -- nearly US$2 trillion -- by 2018, we're not so sure that the G-20 governments are capable of delivering on their promises.
Over the past two years, the risk of G-20 economies slowing down has grown, with the IMF lowering its global growth forecast and warning that the financial market turmoil and economic slowdown in China could further dampen the world economy.
As most central banks have used up their policy means without achieving their aims, the IMF is urging major economies to increase financial expenditure and speed up economic reforms to enhance growth.
Many countries are now concerned about an escalation of the currency war among major exporting economies, especially as China is attempting to devalue its currency to boost its exports, which would throw the global financial market into turmoil, something that the latest G-20 meeting was trying to prevent.
China's Central Bank Governor Zhou Xiaochuan said at a press conference that there is no basis for the continued depreciation of the yuan, a statement that should have the quieted calls from some "hostile" countries for a new "Plaza agreement" to prevent China from further devaluing its currency.
As the G-20 member states often have conflicting national interests, their finance ministers were unable to come up with any substantial policies in Shanghai regarding the global economy.
It is expected that they will continue to seek an effective joint policy so that when they meet in Hangzhou, China next November they may be able to present a viable proposal. If G-20 leaders cannot solve the world's major economic problems, what can they do?
For now, we can only watch closely how things develop and wait to see what happens next. (Editorial abstract -- Feb. 29, 2016)
(By S.C. Chang)
Enditem/pc
http://feedproxy.google.com/~r/rsscna/EngNews/~3/j_NP4lcOSds/201602290009.aspx
