MercoPress, en Español

Montevideo, March 28th 2024 - 11:44 UTC

 

 

G 20 warns on risks to growth, inflation and energy prices

Monday, November 19th 2007 - 20:00 UTC
Full article

Leaders of the world's 20 largest economies stressed on Sunday warned of rising risks to economic development and inflation, and the need for new energy supplies as global economic growth continue to stumble over high oil prices.

Winding up a two-day meeting in Cape Town, South Africa, G20 finance ministers and central bank heads said the global economic outlook was unclear, with commodity price volatility threatening price stability in many countries. They also agreed that volatile and erratic currency movements were unwelcome "While the likely slowdown in global economic growth is expected to be modest, its extent and duration remains difficult to predict," said a communiqué. "While the slower pace of growth is expected to moderate pressure on capacity and resources, rising energy and food prices will remain an important source of price pressures ... There is substantial room to develop new markets in additional commodities." The G20 represents nearly 90 percent of the world economy and two thirds of its population and trade. It includes the wealthy G7 nations -- the United States, Germany, Japan, France, Italy, Britain and Canada -- as well as the European Union, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. South Africa's Finance Minister Trevor Manuel told journalists the gathering had seen a "very deep and challenging discussion on commodity prices". "What we didn't do was to beat up on oil producers," he said. "There was discussion on choices in biofuels ... a better energy mix and the impact of that on climate change". "The key question is adequate supply of crude. And there might not be sufficient investment in refining capacity." The two-day G20 meeting was the first to be hosted by an African country and the first to hold talks with the new heads of the World Bank and International Monetary Fund (IMF); Robert Zoellick and Dominique Strauss-Kahn. The meeting saw talks on the need for reform for both of institutions, with Manuel saying discussions were "very candid." South African President Thabo Mbeki earlier urged reform for both the IMF and World Bank, telling delegates they should stop putting minority interests first. "Clearly, for the global community equally to enjoy prosperity, we need this new model of engagement which actively seeks to break deadlocks, sometimes age-old, which frustrate global economic and social development and the eradication of poverty," he said. "This model must celebrate rather than scorn diversity. It must insist on longer-term collective gains in preference to the shorter-term interests of a few." On the current credit crunch also hitting financial markets, the G20 ministers said there should be greater effectiveness in financial supervision and risk management. The statement also said the G20 countries were "committed to working with our trade authorities to reach a rapid and successful conclusion to Doha," the stalled round of global trade talks. The G20 also called for greater exchange rate flexibility from countries with large current account surpluses in an apparent reference to China. France's Finance Minister, Christine Lagarde, said group discussions did not specifically point a finger at any particular currency. "We all concurred that the currency situation is one that needs a joint approach, concerted approach. Clearly we don't want to point the finger at anyone and we want to operate by consensus," Lagarde said. US Treasury Secretary Henry Paulson said the wider economy faced risks from problems in global credit markets and the sub-prime crisis in the US housing market. "In discussions on the decline in the US housing market, I noted it is still unfolding and I view it as the most significant current risk to our economy," Mr Paulson said, adding he was confident that the US economy would keep growing despite the housing strains. Meanwhile, the new managing director of the International Monetary Fund, Dominique Strauss-Kahn, promised to make substantial progress on developing countries' demands for a bigger voice in the institution. Mr Strauss-Kahn said the G20 agreed that developing nations should have a bigger voice in the IMF, where, under a system devised 63 years ago, richer countries have more power. The weight of each nation's vote is tied to its quota, which is determined by the size of their economy, currency reserves and openness to trade and capital flows. "The fund needs to be reshaped," Mr Strauss-Kahn said. "Times have changed. Some emerging countries have much more economic influence than they had." What could not be agreed was which nations would give up quotas and votes, he said. Next year's G 20 meeting will be hosted by Brazil.

Categories: Energy & Oil, International.

Top Comments

Disclaimer & comment rules

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!