SYDNEY — The world’s top economies have embraced a goal of generating more than $2 trillion in additional output over five years while creating tens of millions of new jobs, signaling optimism that the worst of crisis-era austerity was behind them.
The final communiqué from the two-day meeting of Group 20 (G20) finance ministers and central bankers in Sydney said they would take concrete action to invest investment and employment, among other reforms.The group accounts for around 85 percent of the global economy.
The G20 statement:
“We will develop ambitious, but realistic policies with the aim to lift our collective GDP by more than 2 percent above the trajectory implied by current policies over the coming 5 years.”
Australian Treasurer Joe Hockey, to a news conference:
“We are putting a number to it for the first time — putting a real number to what we are trying to achieve. We want to add over $2 trillion more in economic activity and tens of millions of new jobs.”
The targeted acceleration would boost global output by more than the world’s eighth largest economy Russia produces in a year.
The deal was also something of a feather in the cap of Hockey, who spearheaded the push for growth in the face of some skepticism, notably from Germany.
Germany Finance Minister Wolfgang Schaeuble, after the meeting:
“What growth rates can be achieved is a result of a very complicated process. The results of this process cannot be guaranteed by politicians.”
Australia is acting as president of the G20 this year, following Russia last year and ahead of Turkey in 2015.
The growth plan borrows wholesale from an International Monetary Fund (IMF) paper prepared for the Sydney meeting, which estimated that structural reforms would raise world economic output by about 0.5 percent per year over the next five years, boosting global output by $2.25 trillion.
The IMF has forecast global growth of 3.75 percent this year and 4 percent in 2015.
As of this writing, there was no roadmap on how nations intend to get there or repercussions if they never arrive. The aim was to come up with the goal now, then have each country develop an action plan and a growth strategy for delivery at a November summit of G20 leaders in Brisbane.
“Each country will bring its own plan for economic growth. Each country has to do the heavy lifting.”
Agreeing on any goal is a step forward for the group that has failed in the past to agree on fiscal and current account targets. It was also a change from recent meetings where the debate was still on where their focus should lie: on growth and budget austerity.