The G20 Ministers of Finance and Central Bank Governors met in Sydney over the past weekend. An important outcome of the meeting is a commitment to lift G20’s collective GDP (which accounts for about 85 percent of world GDP) by more than 2 percent above the trajectory implied by current policies over the coming five years. This will amount to over US$2 trillion more in real terms. The higher growth would help generate significant additional jobs.
The targeted increase of more than 2 percent is based on a report prepared by the IMF with inputs from the OECD and the World Bank Group (WBG). The WBG contributions were prepared by a team drawn from various units and led by the Development Economics Vice Presidency. The report finds that with a feasible set of policy reforms, an increase in growth of that order of magnitude is achievable.
As the next step, the G20 members will now prepare growth strategies, identifying policy actions that would help deliver the envisaged higher growth and job creation. How concrete and substantive are those policy actions will be the key test of the group’s commitment to these objectives. In preparing the growth strategies, G20 members are expected to focus in particular on four policy areas: investment, especially infrastructure investment; employment (labor force participation); competition and business environment; and trade. These growth strategies will form the basis of the Brisbane Action Plan that the G20 Leaders are expected to adopt at their summit in November this year.
The enhanced focus on growth and related structural reform and investment agenda emerging from this weekend’s meeting is a welcome development. A reorientation of the G20’s focus to this agenda is something that the WBG had pushed for in its contributions.