News / Economy

G20 Focus: Policy Clarity, Global Rebalancing

Russia's President Vladimir Putin, center, meets with representatives of G20 Youth Summit, St.Petersburg International Economic Forum, June 20, 2013.
Russia's President Vladimir Putin, center, meets with representatives of G20 Youth Summit, St.Petersburg International Economic Forum, June 20, 2013.
TEXT SIZE - +
Reuters
— The world's economic crisis response team grappled on Friday with the prospect of more market volatility resulting from powerhouses the United States, China and Japan charting a course towards recovery.
 
Finance ministers and central bankers from the Group of 20  nations, gathered in Moscow, were expected to call for greater clarity in policy 'messaging' after signals of a withdrawal of U.S. monetary stimulus caused a global sell-off in stocks and bonds, and a flight to the dollar.
 
G20 sources said a draft communique in the works would also urge China to encourage demand-driven growth and allow greater exchange-rate flexibility as part of wider efforts to rebalance the global economy.
 
"There has been a kind of over-reaction of the markets," French Finance Minister Pierre Moscovici said. "So we are looking for the balance."
 
The G20 also backed a fundamental tax rethink that takes aim at the loopholes used by multinational firms and responds to widespread anger among voters hit with higher tax bills to cover soaring national debts.
 
The forum took the lead in the 2008-09 financial crisis and now faces a multi-speed global economy in which only the United States appears to be nearing a self-sustaining recovery.
 
China, for years the engine of global growth, is suffering a slowdown amid doubts over the stability of its financial system; Japan has only recently embarked on a radical fiscal and monetary stimulus experiment, and Europe's economy is more stop than go.

Chairman Ben Bernanke's announcement that the Fed may start to wind down its $85 billion in monthly bond purchases sparked a panicky sell-off, particularly in emerging markets.
 
Investors were calmed by testimony to Congress this week by Bernanke, who is not coming to Moscow, though he said the exit plan from money-printing remained on the cards.
 
Clearer policy communication is "crucial for preventing serious volatility on financial markets," said Russian Finance Minister Anton Siluanov.
 
Negotiators working on a joint communique reconvened after a drafting session on Thursday night that sources said was less fraught than at the February G20 meeting in Moscow, when there was talk of a currency devaluation war.
 
Ministers will review the text over dinner.
 
The BRICS emerging markets caucus — Brazil, Russia, India, China and South Africa — also met on Friday. They were unlikely to progress on joint steps, such as a shared pool of forex (foreign exchange) reserves, to guard against capital flight.
 
Jobs commitment

The United States is beating its fiscal targets thanks to improving growth and Washington has urged the G20 to priorities growth over fiscal consolidation sought by Europe's largest economy, Germany.
 
G20 labor ministers, who met on Thursday, held a joint session on Friday with finance ministers, putting the jobs crisis in Europe — where youth unemployment is nearly 60 percent in debt-strapped Greece and Spain — at the center of the debate.
 
"Getting people back to work must be top of the agenda," U.S. Treasury Secretary Jack Lew wrote in an article for the Financial Times. "In many parts of the world, such as Europe, growth is too weak to drive job creation."
 
The European Union's employment commissioner, Laszlo Andor, shared Lew's prescription for recovery, telling Reuters that investment in jobs was vital for maintaining social peace and emerging from years of austerity.
 
"If in the name of competitiveness and internal devaluation you just compress wages constantly, you also kill demand and you can kill the recovery," Andor said.
 
The G20 released a tax action plan drawn up by the Organisation for Economic Co-operation and Development (OECD) that said the existing system didn't work, especially when it came to taxing companies that trade online.
 
The tax plan is one of the major 'deliverables' that will go before the summit of G20 leaders being hosted by President Vladimir Putin in St Petersburg in early September.
 
Protest in Moscow

Russia, the first big emerging nation to host the annual presidency of the G20, finds itself in an awkward political spot following the flight of former U.S. spy agency contractor Edward Snowden to Moscow.
 
G20 delegates arriving at Sheremetyevo airport may not have bumped into Snowden, who has requested asylum in Russia, but they ran into a protest in Moscow over the jailing on Thursday of a prominent Russian opposition politician.
 
Alexei Navalny, who organized protests against Putin's election for a third Kremlin term last year, was sentenced to five years in prison for theft in a case that drew international condemnation as politically motivated.
 
Navalny was released on bail on Friday pending an appeal.
 
Officials checking in to the five-star Ritz Carlton hotel on Moscow's central Tverskaya Street paid little attention to thousands of Navalny supporters protesting outside, in keeping with a G20 tradition of keeping politics and policy separate.
 
"The rally and the traffic jams are causing meetings to be postponed," said one European diplomat. "But we fully understand the democratic right to protest."

You May Like

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 More

Open Source Seeds Hit the Market, Raise Awareness

First open source seeds include 29 new varieties of broccoli, celery, kale, quinoa and other vegetables and grains More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.