Friday, February 21, 2014

G-20 finance ministers focus on global growth

A group of 20 finance ministers and central bankers from the world’s biggest economies which make up the G-20, plan to meet in Sydney this weekend with the top priority of addressing the issue of market turmoil present within the global economy and discussing ways to reinvigorate global growth. In December, the U.S. central bank said it would start reducing its monthly Treasury and mortgage bond purchases, intended to keep interest rates low and support economic recovery in the aftermath of global recession. Investors responded by pulling out of emerging markets and channeling their money to the U.S. in hopes of higher returns, which only contributed to sharp falls in stock markets and the currencies of some developing countries.
            The key focus of the meeting will be exploring ways of restoring global growth amid indications that the world’s largest economies are once again slowing. It is suggested that boosting private investment in infrastructure would help stimulate growth, and by committing to a global growth target higher than the Interenational Monetary Fund’s forecast, which is 3.7 percent this year, the economy will be well on its way to a more stable and secure state.
            U.S. Treasury Secretary Jacob Lew states that boosting global growth and creating more jobs will be the G-20’s top priority. “Despite signs of improvement, global growth remains uneven and well below potention, while unemployment remains stubbornly high in many places,” Lew told reporters in Sydney on Friday. “The growth strategies that we will be developing must be ambitious in substance and address both deficiencies in near-term demand as well as longer-term economic challenges.”
           Another key item addressed will be the failure of the U.S. to pass the 2010 IMP reform package. Last month, Congress rejected a funding request from the Obama administration that would have double the IMF’s lending capacity to about $733 billion and increased the voting power of emerging economies. The international lending agency’s governing board gave a green light to the overhaul in 2010, and approval by congress in the last remaining roadblock for it to take effect.
            I think it is necessary that the United States support the IMF reform now in order to secure global economic stability in the future. With the funding capacity increase, the global economy will have more room to grow. This reform is not only in the interest of the United States but will be beneficial to all other countries as well. In this meeting, the members must come to a consensus and fund the best possible solution to the present deficit of global economic growth. Without the cooperation of all economies working together, nothing will ever get accomplished and the economy will continue to drop.
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