Although G20 economies were divided over Syria, leaders remained united over issues concerning the world economy, showing commitment to a “durable exit” from one of the longest crises in financial history.
G20 leaders said that the world economy’s top priorities are job creation, particularly for the young, and economic recovery through the implementation of sound macroeconomic policy, structural reforms and framework.
Given that the world has not yet fully recovered from the ongoing financial downfall in advanced economies, G20 economies need to “carefully” monitor the global financial markets to stave off the possible negative effects of the U.S. monetary stimulus exit.
Clear calibration and communication between advanced and developing economies were urged by the leaders to buffer negative spillovers from the gradual tapering of quantitative easing in the U.S.
“We recognize that strengthened and sustained growth will be accompanied by an eventual transition toward the normalization of monetary policies,” said the G20 communique announced in Saint Petersburg.
“Our central banks have committed that future changes to monetary policy settings will continue to be carefully calibrated and clearly communicated.”
The world economies have been watching the U.S. Federal Reserve’s next move in its quantitative easing, with many analyses pointing to the possibility of the world’s largest economy beginning to scale back its $85 billion monthly liquidity injection this month.
This general consensus worldwide has adversely shocked financial markets of emerging economies, such as India and Indonesia where capital-flow volatility increased on the back of foreign asset sell-offs.
Even though Korea has relatively shown to be safe from this side effect of unconventional monetary easing that has triggered financial disorder in emerging economies, Asia’s fourth largest economy remains cautious.
Bank of Korea Gov. Kim Choong-soo warned that the U.S. could take the path of tapering its quantitative easing this month after providing a clearer picture of its plans at the U.S. Federal Open Market Committee meeting next week.
He added that unless economic projections of the U.S. and Europe change, the U.S. could move forward with QE tapering.
Another priority of the G20 agenda was tackling tax avoidance via offshore accounts amid heightened international calls for clamping down on companies and individuals stashing their money in tax havens.
Leaders agreed to further collaborate by exchanging tax information as part of efforts to improve public finances and transparency.
“Cross-border tax evasion and avoidance undermine our public finances and our people’s trust in the fairness of the tax system,” the G20 said.
“We endorsed plans to address these problems and committed to take steps to change our rules to tackle tax avoidance, harmful practices and aggressive tax planning.”
By Park Hyong-ki (
hkp@heraldcorp.com)
