ISTANBUL: The world’s top 20 economies on Tuesday expressed determination to raise global growth but struggled to overcome divisions over the most suitable methods and how best to resolve the Greek debt crisis.
G20 finance ministers and central bank chiefs meeting in Istanbul acknowledged that global economic growth remained “uneven” and the recovery “slow,” especially in the eurozone and Japan as well as some emerging market economies.
They also warned of the risk of “persistent stagnation” in some leading economies due to “prolonged low inflation alongside sluggish growth.”
“We are determined to overcome these challenges” to deliver sustainable growth that can create jobs and encourage inclusiveness, a key target of the Turkish G20 presidency, they vowed in their final communique.
The G20 states said the recent sharp decline in oil prices will provide “some boost” to global growth and should allow states to “reassess” fiscal policies to sustain economic activity.
It said that fiscal policy “has an essential role” in building confidence and sustaining domestic demand, in a prod to some states to drop their insistence on austerity.
However, there were indications of tensions that some states—notably fiscal hawk Germany—were unwilling to relax fiscal policy enough to boost demand.
US Treasury Secretary Jacob Lew said Washington wanted to see countries use all the tools at their disposal to boost growth.
“In Europe, there’s a need for more fiscal policy. There’s a demand shortfall,” he told reporters in Istanbul.
Lew added that the United States—currently enjoying a strong economic performance—could not alone be responsible for global growth.
“It’s not going to be a good ride for the global economy if the one strong wheel is the United States,” he said.
In line with agreements made during last year’s Australian presidency of the G20, members are seeking to raise global growth by at least 2 percent and create millions of new jobs over the next four years.
IMF managing director Christine Lagarde said “time is of the essence” given the risks of persistent low growth and the high unemployment faced by many states.