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The Economic G20

In: Business and Management

Submitted By gneedham
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G-20 Finance Officials to Urge Spending Ramp-up, Economic Overhauls
The world’s top finance officials meeting in China this week will urge their counterparts to ramp up spending and speed economic overhauls to revive flagging growth, worried about an overreliance on easy-money policies that could spell trouble for the global economy.
A series of global market routs and rising recession risks have raised the stakes for the Group of 20 leading economies as they try to craft a coordinated strategy to boost the world’s economic output and calm investor jitters.
The problem is figuring out how to revive demand in a world where central banks are running out of gas and most of the world’s biggest growth engines are downshifting, idling or struggling to get out of first gear. The solution, many G-20 officials have indicated in recent days, is a stronger effort to restructure stagnating economies and increase investment in infrastructure.
“We have to commit to using all policy levers,” said U.S. Treasury Secretary Jacob Lew in an interview. “The burden shouldn’t be on any one of the policy levers, either excessively or certainly not exclusively.”
Worried about a dimming outlook, the International Monetary Fund on Wednesdaycalled on the G-20 to engineer “coordinated demand support, using available fiscal space to boost public investment and complement structural reform.”
The temptation, however, will be to keep relying on monetary policy or even currency depreciation to spur exports.
Central banks around the world, notably in Europe and Japan, have expanded policies that are cheapening their exchange rates. China, meanwhile, is struggling to manage a slowdown and major economic overhaul, leaving markets watching for a yuan depreciation to goose exports.
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