- POSTED: 31 Jul 2014 14:52
The G20's pledge to boost growth could be wiped out by rising interest rates and weakening emerging economies, an IMF report said, as chief Christine Lagarde warned on Thursday (July 31) of "slow" progress in reaching the goal.
SYDNEY: The G20's pledge to boost growth could be wiped out by rising interest rates and weakening emerging economies, an IMF report said, as chief Christine Lagarde warned on Thursday (July 31) of "slow" progress in reaching the goal.
Lagarde said there was uncertainty over whether the group of 20 leading economies had the will to meet their two per cent additional growth target, which they agreed to at a meeting of finance ministers in February in Sydney.
"I am not going to point the finger at any of the members but... it has been slow in the making that's for sure," the International Monetary Fund's managing director told The Australian Financial Review. "There is a lot of pressure on finance ministers to come up with actual measures."
The IMF said in its report that changing growth patterns could slow global growth by as much as 2.0 per cent -- the same figure the G20 countries had vowed to lift their economies by over the next five years.
Interest rates were expected to rise in advanced nations, particularly the United States and Britain, as they see improving economic growth, the Fund said. Emerging market nations are also "slowing in a synchronised and protracted manner", and the two risks when combined could "be damaging for the global economy -- lowering output by about 2.0 per cent", it added.
Despite doubts that the G20 target would be reached, Lagarde said the push by Australia -- which assumed the group's presidency this year -- to place growth and infrastructure investment at the centre of all the economic grouping's meetings was laudable.
"If it's conducted on a synchronised basis and in consultation with each other, then the output from the structural reforms will be a lot better and bigger," she said.
Australian Trade Minister Andrew Robb said at a G20 trade ministers' meeting in Sydney this month that there was "still quite a lot of room" for countries to undertake more measures to boost growth.
Robb said his G20 counterparts reaffirmed their commitment to free trade as the central driver of growth during the day-long meeting, which came ahead of the leaders' summit in Brisbane in November.