9.1 C
London
Friday, April 26, 2024
HomeNewsG20 agrees to tackle 'tensions and vulnerabilities'

G20 agrees to tackle ‘tensions and vulnerabilities’

Date:

Related stories

IMF-supported legislation enhances Sri Lanka’s economic revival

Sri Lanka's economy, poised to expand by 3 per...

Pakistani teen receives life-saving heart transplant in Indian hospital

Ayesha Rashan, a 19-year-old teenager from Karachi, underwent a...

Pakistan PM urges economic overhaul amidst IMF negotiations

Prime Minister Shehbaz Sharif of Pakistan delivered a national...

Channel deaths: Two charged with immigration offences

THE police have charged two men with immigration offences...

Former Post Office executive forgets key email on remote access, inquiry hears

FORMER Post Office executive Angela van den Bogerd has...

G20 LEADERS drew a veil over their economic policy disputes today, agreeing to tackle tensions that have raised the spectre of currency wars and giving the nod to countries that have seen huge capital inflows to impose controls.

The developed and emerging nations agreed at a summit in Seoul to set vague “indicative guidelines” measuring imbalances between their multi-speed economies but – calling a timeout to let tempers cool – left the details to be discussed in the first half of next year.

In the final statement of the summit, the group’s fifth since the financial crisis exploded in 2008, the leaders vowed to move towards market-determined exchange rates and shun competitive devaluations.

They also agreed that there was a critical, but narrow, window of opportunity to conclude the long-elusive Doha round of trade liberalisation talks launched in 2001.

After weeks of verbal jousting, the US and China sought to bury the hatchet over Beijing’s currency, which Washington says is undervalued, and global risks stoked by the US Federal Reserve printing money to rev up its struggling economy.

“Exchange rates must reflect economic realities. Emerging economies need to allow for currencies that are market driven,” US President Barack Obama told a news conference after the communique was agreed.

“This is something that I raised with President Hu (Jintao) of China and we will closely watch the appreciation of China’s currency.”

The G20’s accord sought to recapture the unity that was forged in crisis two years ago, but deep divides meant the leaders could not venture much beyond what was already agreed by their finance ministers last month.

Negotiators had laboured until the early hours of the morning to thrash out an agreement their leaders could all endorse, despite sharp disagreements that were on public display in the days before the meeting.

In a departure from earlier statements, the G20 said it would allow emerging market countries with “adequate reserves and increasingly overvalued flexible exchange rates” to use “carefully designed macro-prudential measures”.

That is a green light for countries such as Brazil, which has already sought to stem massive inflows of capital, to take further measures, short of deliberately engineering a lower exchange rate.

Tempers had flared over the US Federal Reserve’s latest $600bn (£374.6bn) bond-buying programme aimed at strengthening a shaky recovery, while Ireland’s worsening debt troubles served as a reminder that the financial system is far from fully healed.

“This hasn’t been a love-fest,” an official who participated in the negotiations said.

In particular, the leaders were unable to agree on how to identify when global imbalances pose a threat to economic stability, merely committing themselves to a discussion of a range of indicators in first half of 2011.

Tim Condon, head of research at ING Financial Markets in Singapore said it was “hard to disagree” with the vows of the leaders but they had fallen short of the progress hoped for going into the summit.

“They decided just to put down a lot of laudable objectives as the conclusion of the meeting and hope that they can do better, that more can be accomplished in future meetings,” he said.

The G20 has fragmented since a global recession gave way to a multi-speed recovery. Slow-growing advanced economies have kept interest rates at record lows to try to kick start growth, while big emerging markets have come roaring back so fast that many are worried about overheating.

“G20 credibility does depend on showing results, we cannot get out of this with beggar-thy-neighbour policies,” Canadian Prime Minister Stephen Harper said. “We need instead to continue to coordinate our actions going forward. The recovery is fragile.”

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories

LEAVE A REPLY

Please enter your comment!
Please enter your name here

five × one =