June 23, 2010 / 12:04 PM / 9 years ago

G20 to warn against complacency on economy

WASHINGTON (Reuters) - The Group of 20 major economies will warn against complacency in tackling the global economic crisis and say that sickly public accounts could hit long-term growth, a draft G20 document shows.

The CN Tower is seen behind the Metro Toronto Convention Centre which will be hosting the June 26-27 G20 Summit in downtown Toronto June 14, 2010. REUTERS/ Mike Cassese

The draft version of the summit communique, obtained by Reuters and drawn up ahead of a G20 leaders meeting this weekend in Toronto, reflected the different views within the G20 on how to proceed with economic policy.

The draft, dated June 11, said the recovery was “uneven and fragile” with unemployment at unacceptable levels. “There is no room for complacency,” it said.

At the same time, it said “fiscal challenges in many states are creating market volatility, and could seriously threaten the recovery and weaken prospects for long-term growth.”

The United States has argued for continued stimulus spending by governments to ensure the global economic recovery does not fizzle out.

Other countries, such as Germany, intend to cut spending quickly in order to bring down public debts and deficits.

“Further actions are still required to address the underlying causes of the global financial crisis and promote more responsible and transparent banking sectors,” it said, without spelling out further details.

Reforms of banking around the world, along with ways to ensure the recovery of the global economy, are high on the agenda of this weekend’s summit.

The draft said the G20 would push for conclusion of a long-delayed world trade deal and would pledge to extend a commitment not to raise barriers to investment or trade for three more years, through 2013.

G20 nations converge on Canada on June 26-27 as Europe fights a debt crisis and the United States battles persistently high joblessness.

The summit also comes days after China dropped the controversial peg of its currency to the dollar, a step long called for by the United States and other countries as an important part of the push to rebalance the global economy.

The draft communique is likely to be negotiated and amended by leaders at the summit.

The G20 groups the world’s biggest economies and covers two-thirds of the world’s population. In includes Australia, Argentina, Brazil, Indonesia, Japan, Mexico, Russia, Korea, Saudi Arabia, South Africa, and Turkey in addition to the big European economies, the United States and Canada.


One concrete agreement among the leaders involved trade. The group praised itself for avoiding the temptation to put up trade barriers during the economic meltdown and said it would continue to work to bring them down.

“We renew for a further three years, until the end of 2013, our commitment to refrain from raising new barriers to investment or trade in goods and services, implementing World Trade Organization (WTO)-inconsistent measures to stimulate exports, or imposing new export restrictions or other barriers,” it said.

“Where any protectionist measures have been enacted in the context of the economic crisis, we agree that these should be lifted.”

It also pledged again for a renewed push to complete world trade talks known as the Doha Round.

“Bringing the WTO Doha Development Round to a successful conclusion as soon as possible is more important than ever,” it said. “Each of us is ready to make contributions, and we pledge to empower fully our negotiators to undertake the give-and-take necessary to move into endgame negotiations.”

The leaders would their direct trade ministers to present a plan outlining the “way forward” in the talks at the next G20 summit in November in Seoul, it said.

The draft touched on moves to fight corruption and climate change, but it focused mostly on the economy, including the bright spots since the last G20 met last in Pittsburgh.

“Our efforts to date have borne good results. Fiscal and monetary stimulus has helped restore private demand and lending, and we have taken strong steps toward increasing the stability of our financial systems,” the draft said.

Editing by William Schomberg and Doina Chiacu

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