Australian Treasurer Joe Hockey yesterday said it was “hugely important” that G20 leaders agree to faster global growth targets when they meet in Sydney this weekend.
Hockey is chairing a meeting of G20 finance ministers and central bankers, and wants not only a commitment for growth targets, but also endorsement for reforms to labor markets, tax rules and infrastructure spending.
“It is hugely important for the world that the finance ministers have an aspiration to grow beyond the current IMF forecasts of around 3.7 to 4 percent growth year on year,” he told the Australian Broadcasting Corp (ABC).
Hockey said that if this was achieved, “then we’re going to create the jobs that will get global trade going at the level that we need in order to help to increase prosperity and ultimately help us to pay down our deficits and our debt.”
However, Hockey, who plans bilateral meetings with virtually every finance minister attending to get his message across, would not say what the target should be, although Australian media reports said 5 percent was the goal.
He was determined to ensure the meetings did not descend into a “talkfest,” and urged decisive action on reforms to help spur growth.
“The message to Australia and the message to the rest of the world is exactly the same: Complacency will not deliver growth,” Hockey said in a separate interview with the Australian newspaper.
“Only substantial domestic reform — delivering freedom in the marketplace, delivering less regulation, less tax, more transparent markets, greater competition — only those things will be the drivers of growth,” he said.
While Hockey wants to keep the talks focused on growth, the capital flows and exchange rate volatility impacting emerging economies since the US central bank’s exit from its stimulus package promise to take center stage.
Hockey admitted that US Fed Chair Janet Yellen, making her international debut as the new chief of the US central bank, may not be the most popular person in Sydney.
“Well that’s right. There’ll be a number of countries that’ll express that view and the G20 is a hugely important forum for developing nations in particular that are very exposed to tapering to express a view,” he told ABC. “My view is that the United States Federal Reserve has to do what is in the best interest of the United States, just as we would expect the Reserve Bank to do the heavy lifting for the Australian economy first.”
On Tuesday, the US called on colleagues in the G20 to boost growth to fight off short-term economic risks, boost demand and generate jobs.
In a letter to G20 members, US Secretary of the Treasury Jack Lew warned of weak demand in Japan and Europe, and said the world was still facing “considerable volatility.”
“While we are experiencing a global economic recovery, activity remains weak and global demand is deficient. As a result, our economies are producing too few jobs,” Lew said.
“Our leaders’ commitment to strong, sustainable and balanced growth requires restoring full employment and achieving a durable rebalancing of global demand,” Lew added.
Lew said in the letter that many of the current economic challenges and shortfalls are likely to persist if current policies remain unchanged.
The eurozone still appears vulnerable to very low inflation, and “key surplus countries” — a likely pointer to Germany — need stronger domestic demand, he said.
In Japan, the outlook for strengthening domestic demand “has clouded,” he said, calling for full implementation of promised reforms to shore up domestic consumption.
“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,” Lew said.
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