G-20 Draft Urges Job Training, Infrastructure SpendingChristopher Wellisz
Leaders of the Group of 20 meeting in Russia will consider endorsing a strategy for long-term economic growth that emphasizes steps such as infrastructure spending and job training, according to Bloomberg BNA.
Growth prospects for 2013 “have been marked down repeatedly over the last year, regional growth disparities remain wide, and unemployment, particularly among youth, remains unacceptably high,” according to a draft of the so-called action plan to be considered at the meeting today and tomorrow in St. Petersburg and obtained by Bloomberg BNA. “The recovery is too weak, and risks remain tilted to the downside.”
The draft marks a shift from strategies adopted at previous summits, which emphasized coordinated monetary and fiscal policies to spur the global economy, according to Bloomberg BNA.
“Recognizing the need to push ahead more urgently with important structural reforms, we have reset our reform agenda along more relevant, concrete and well-targeted lines,” according to the draft.
At the same time, the plan reiterates a commitment to “move more rapidly toward more market-determined exchange-rate systems and exchange rate flexibility to reflect underlying fundamentals and avoid persistent exchange rate misalignments,” Bloomberg BNA reported.
“We will refrain from competitive devaluation and will not target our exchange rates for competitive purposes,” the draft plan reads.
The plan notes that G-20 members have been successful in containing “tail risks” to recovery and improving financial conditions, citing a rebound in private demand in the U.S., evidence of strength in Japan and the U.K., and signs of recovery in the euro zone.
The main challenges to global economic recovery cited in the action plan include fragility in some parts of the European banking sector and the risk of further delays in an EU banking union. Other perils include slower growth in emerging markets, “reflecting in some cases volatile capital flows as well as structural challenges in some economies,” and the risk of “another disruptive fiscal policy debate” in the U.S. associated with the need to raise the government’s borrowing limit later this year.