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G20 says global economic growth uneven, weaknesses in demand, and supply side constraints hamper growth

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Capital Market
Last Updated : Sep 22 2014 | 5:45 PM IST
Growth in the global economy is uneven and remains below the pace required to adequately generate much needed jobs, according to a latest communiqufrom the G20 finance ministers meet, while welcoming the stronger economic conditions in some key economies. Downside risks persist, including in financial markets and from geopolitical tensions. The global economy still faces persistent weaknesses in demand, and supply side constraints hamper growth. We need strong, sustainable and balanced growth and robust financial sectors to safeguard our economies from these risks and put people into jobs. We are united and determined in our response to these challenges.

Chief amongst our response is our Sydney declaration to develop new measures that aim to lift our collective GDP by more than 2 per cent by 2018 above the trajectory implied by policies in place at the time of the St Petersburg Summit in 2013. Structural reforms will be important in this regard. We have developed a set of new concrete measures that will facilitate growth, increase and foster better quality investment, lift employment and participation, enhance trade and promote competition. Preliminary analysis by IMF-OECD indicates these measures will lift our collective GDP by an additional 1.8 per cent through to 2018, including from important positive spillovers. These measures, along with macroeconomic policies, are designed to lift global growth and contribute to rebalancing global demand. Implementation of these measures is also essential to foster private sector growth, to give our citizens more opportunities to improve their living standards. In the lead up to the Brisbane Summit, we will continue to identify a series of additional measures to meet our collective growth ambition. We will hold each other to account in implementing these policy commitments.

Monetary policy in advanced economies continues to support the economic recovery, and should address, in a timely manner, deflationary pressures where needed, consistent with central banks' mandates. We are looking to achieve broad-based and robust growth and this will facilitate the eventual normalisation of monetary policy in advanced economies. We will continue to clearly communicate our actions in a timely way and be mindful of impacts on the global economy as policy settings are recalibrated. We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility. We will monitor these risks and continue to strengthen macroeconomic, structural, and financial policy frameworks, and other complementary measures, as the best response to managing risks, and meet our G20 exchange rate commitments. We will also ensure the continued effectiveness of global safety nets.

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First Published: Sep 22 2014 | 5:17 PM IST

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