World leaders cast about for a common approach to securing an uneven economic recovery that is showing signs of fading.
As the official agenda shifted toward economic and political issues from aid and development, wedge issues such as shrinking government debt piles, regulating banks, and the value of China’s yuan currency moved to the fore.
The G20 will agree to strive to cut their deficits in half between now and 2013, German Chancellor Angela Merkel said. “This will be part of the final document,” Merkel said.
A global recession has given away to a three-speed recovery, with Asia’s growth roaring ahead while the US recovery plods along and Europe lags behind. As a result, G20 unity is fracturing, with leaders disagreeing over how best to safeguard recovery. Unemployment remains high in most advanced economies, and growth has slowed since late last year.
“Quite honestly, I think the world economy is faced with a number of uncertainties,” Prime Minister Manmohan Singh told the Toronto Star.
In Europe, where Greece’s debt troubles have trained attention on unsustainable public spending, the emphasis is on budget cuts to restore confidence. The US wants the rest of the world to bolster domestic demand and not rely on Americans as consumers of last resort.
Europe’s policy response will be “a major determinant of which way the world economy evolves,” Singh said.
Balanced growth was the key phrase when G20 leaders last met in Pittsburgh in September. Countries agreed to work together to iron out trade imbalances that pose a threat to the global economy.