On Monday 5 September, at their 11th summit, held in Hangzhou (China), the world's 20 largest economies undertook to make use of all the macro-economic policy instruments available to them in order to tackle the downturn in global growth.
"The leaders of the G20 of the principal global economies agreed to make use of many instruments, including budgetary and monetary policy, as well as structural reforms to tackle the short-term risks", said Chinese President Xi Jinping in a statement at the final press conference, published online by Xinhua (our translation).
In their French-language final press release, the countries of the G20 stress that budgetary strategies are "just as important" as monetary policies and structural reforms, and highlight the need to make tax policy and public expenditure "more favourable to growth, for instance by giving priority to high-quality investments (…) and making sure that public debt expressed as a proportion of GDP is on a sustainable trajectory".
The Hangzhou summit developed an action plan to inspire the G20 countries to implement their national growth strategies, to allow the global economy to grow by 2% by 2018 compared to 2014 figures (see EUROPE 11198).
Focus on innovation. According to Xi, budgetary and monetary tools alone are no longer enough to produce the efforts required to a deal with a "sluggish" economic recovery. Hence the decision of the Chinese Presidency of the G20 to examine the potential represented by innovation in terms of growth and distributing economic opportunities. The G20 summit also adopted a reference document on this issue listing opportunities related to innovation, not only in the fields of research and new technologies, but also in the form of new trade and governance models.
As well as the question of trade flows (see other article), the Chinese President called for a reform of the IMF quotas to shore up the position of the emerging countries. He also laid emphasis on the inclusion, on 1 October, of the renminbi in the basket of component currencies of the Special Drawing Rights (SDR), the unit of account of the IMF.
The Europeans, who had turned up to defend their economic performance and strategy based on the triptych of 'investment, structural reforms and responsible management of public finances', called for the commitments already made in this area to be adhered to (see EUROPE 11612). The president of the European Commission, Jean-Claude Juncker, stressed the EU investment plan, which has led to €116 billion in new investments after one year in place. "I am working on proposals to extend the plan, in both in time and in scale", he said.
Finally, in the financial field, the G20 pledged its support to the work of the Basel Committee to finalise the Basel III prudential framework by the end of this year, "without significantly increasing own-funds requirements in the banking sector, whilst promoting a fair situation". The banking industry has concerns that the finalisation of this reform will bring about a steep hike in optimum quality capital requirements (see EUROPE 6613).
Germany will take over the rotating Presidency of the G20 in 2017. (Original version in French by Mathieu Bion)