Resist protectionism, keep markets open: G-20
As the global economic risks and uncertainties have increased substantially, it said, "our collective focus now is to strengthen demand, growth, confidence and financial…We have agreed today on a globally coordinated economic plan to achieve those goals through our framework for strong, sustainable and balanced growth."
Besides underlining the need for decisively dealing with the sovereign debt problem in the Eurozone countries, the Action Plan calls for "boosting demand and economic growth, and reducing persistently high and rising unemployment in many advanced economies, especially among young people". It also underlined the need for dealing effectively with spike in oil prices in wake of geopolitical risks in an environment of limited spare capacity and modest inventories.
The priority, it added should be to ensure that emerging markets maintain a strong and sustainable growth path that contributes to the global recovery and quality job creation. Calling for "stronger actions" to promote growth and stability, the Action Plan said, "we need to intensify our efforts to reduce both internal and external imbalances" and address problems pertaining to high fiscal deficits. Efforts, it added, should be made to minimise risks and ensure proper functioning of our financial systems, supported by fiscal and monetary policy actions.
In order to address near term risks, the Action Plan said the Euro Area members of the G-20 would be taking all necessary measures to safeguard the integrity and stability of the area, improve the functioning of financial markets. The United States, it said, will calibrate the pace of its fiscal consolidation by ensuring that its public finances are placed on a sustainable long-run path so that a sharp fiscal contraction in 2013 is avoided. The other developed countries will also be taking similar steps to promote growth in the larger interest of global recovery.
Referring to the issue of exchange rate, the Action Plan reaffirmed the commitment of the G-20 leaders to "move more rapidly toward market-determined exchange rate systems and enhance exchange rate flexibility to reflect underlying fundamentals, avoid persistent exchange rate mis-alignments, and refrain from competitive devaluation of currencies". China, it said, was building on its commitment to gradually reduce the pace of reserve accumulation, and to allow market forces to play a larger role in determining movements of the RMB and to increase the transparency of its exchange rate policy.
"We welcome China`s commitment to continue exchange rate regime reform," it added. Oil-exporting countries, the Plan said, "will continue to pursue productive public investment and encourage private investment, which will have positive regional and global spillover effects, while ensuring fiscal sustainability given the volatile nature of revenues." The other important components of the Action Plan include increased investment in infrastructure sector, labour reforms, stability of real estate sector and strengthening of social safety nets. The progress of the Plan to combat global problems will be reviewed at the St. Petersburg Summit in 2013.