World Economy

G-20 Meeting Warns of Challenges

G-20 Meeting Warns of ChallengesG-20 Meeting Warns of Challenges

Financial officials and policymakers attending a Group of 20 (G-20) ministerial meeting have warned that weak growth and diverging monetary policies among major economies may make 2015 a difficult year for the global economy.

The G-20 finance officials look likely to reject a proposal to set countries specific investment targets to spur a global economy which looks increasingly reliant on the United States for growth, Reuters said.

The meeting of finance ministers and central bankers in Istanbul comes as Greece casts a new shadow over Europe, cheap oil plays havoc with inflation and growth forecasts and a strengthening dollar threatens emerging economies.

Deputy Prime Minister Ali Babacan said Turkey – G20 chair for 2015 – preferred to set binding national investment targets but it appeared to be struggling to win support.

“Would all international countries be committed? ... We don’t know yet,” Babacan said in a speech on Monday.

One G-20 source told Reuters the idea had already been taken off the table.

Germany, with its hefty current account surplus and a balanced budget, has come under pressure at successive G20 meetings to spend more. Berlin has rejected that suggestion in the past and is likely to argue that its rising domestic demand and plans to increase investment, largely through the private sector, shows it is doing what it can, according to European sources familiar with the G-20 agenda.

Its eur zone peers France and Italy have urged more investment in the struggling single currency bloc.

“We need to be bolder in Europe in terms of risk taking ... I hope that policy action will indeed facilitate stronger private sector investments, especially infrastructure investments,” Italian Economy Minister Pier Carlo Padoan told a financial gathering in Istanbul ahead of the G20 meeting.

  Call for Joint Effort

While addressing financial officials and bankers from more than 40 countries, Chinese Deputy Finance Minister Zhu Guangyao highlighted risks for the world economy and called on joint efforts to face the challenges.

“The sluggish global growth is a real challenge faced by all members of G-20,” Zhu said, referring to the downgrade of global economic growth from 3.8 percent to 3.5 percent in January by the International Monetary Fund.

Diverging monetary policies and the fall of oil prices are risks causing global economic turbulence, Zhu said.

The rapid drop in the prices of oil and other commodities triggered a surge of inflation for exporters such as Russia and Brazil forced these economies to raise interest rates.

IMF Managing Director Christine Lagarde expressed similar concern. “There is a lot at stake ... Without action, we could see the global economic supertanker continuing to be stuck in the shallow waters of sub-par growth and meager job creation,” she said in a blog on the IMF website.