The G20 Communique: key points

June 20 20:15 2012 Print This Article

G20 Summit

Benjamin Umuteme

The leaders of the G20 top economies, who met in Los Cabos, Mexico to discuss the eurozone crisis and other challenges, have declared that “strong, sustainable and balanced growth remains the top priority of the G20.”

G20 Euro-solution: Growth over austerity

“All G20 members will take the necessary actions to strengthen global growth and restore confidence,” with advanced economies keeping the pace of their fiscal rebalancing appropriate for growth recovery.

“Should economic conditions deteriorate significantly further, those countries with sufficient fiscal space stand ready to coordinate and implement discretionary fiscal actions to support domestic demand, as appropriate.”

Euro area action on banking union
The euro area members of the G20 — Germany, France and Italy — pledged to “take all necessary policy measures to safeguard the integrity and stability” of the eurozone. They declared their intention to strengthening eurozone integration, including moving toward a euro area banking union that would include banking supervision, a mechanism for winding up failing banks, and eurozone-wide insurance for bank deposits.

Prices

With monetary policy loose throughout much of the G20, the group said they aim to maintain price stability without harming economic recovery, mentioning specifically energy and commodity prices. “G20 members will remain vigilant of the evolution of oil prices and will stand ready to carry out additional actions as needed,” they said. They praised member and global oil power Saudi Arabia for being ready to boost production to ensure adequate supply.

Global rebalancing

The group acknowledged progress on rebalancing heavily skewed global trade, noting that countries with large current account surpluses had moved to increase domestic demand, while those with deficits had acted to boost national savings. China’s move to allow its renminbi currency to trade based more on market forces was welcomed specifically.

Spillover impacts

Leaders committed to try and minimise the negative impact of their policies on other countries. They recognised that high volatility of capital flows and disorderly exchange rate movements “have adverse implications for economic and financial stability.”

Protectionism

The G20 said they are “deeply concerned” about rising instances of protectionism around the world. “We are firmly committed to open trade and investment, expanding markets and resisting protectionism in all its forms, which are necessary conditions for sustained global economic recovery, jobs and development.

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