Talking of global economic revival in the grim backdrop of the attacks in Paris may seem like love in the time of cholera, to use Gabriel García Marquez’s famous expression, but the Group of 20 Summit of the world’s leading economies had to do just that, given that economy was meant to be the core agenda at the Antalya summit in Turkey, not far from Syria’s theatre of terror. The fact that leaders put aside worries on security to arrive at a consensus on achieving robust and inclusive growth can be an achievement in itself. The week began with Japan, world’s third-largest economy, announcing it had slipped into a recession in the third quarter. Europe, shaken by the refugee crisis and terror attacks, appears ready to loosen its monetary policy further even as the US is trying to raise rates. Fiscal disciplinarians do not like unconventional pumping of cheap money, as it boosts global demand and raises fears of fragile bubbles that would remind one of the financial meltdown of 2008 — which is where the current crisis began.
It does not help that BRICS — Brazil, Russia, India, China and South Africa — as a group are wobbly on their growth paths, each with its own woes, whereas they were expected to be the next big engine of global economic growth. The heartening news is that G20, who represent 80% of the world economy, have agreed to strengthen cooperation and “carefully calibrate” macroeconomic policies. This should reassure RBI governor Raghuram Rajan, who earlier this year warned against “beggar-thy-neighbour” monetary policies. Financial stability and price stability are defined among key objectives in the G20 communique. Assurances to stimulate employment and boost investment in infrastructure are welcome. The G20 aims to increase by 2018 the share of aggregate investment in the collective GDP of its member economies by one percentage point. In the welter of technical details the G20 has spewed, this hopefully means developed economies helping the emerging ones with funds to build infrastructure in a manner that widens the scope for worldwide economic revival.
While recognising financial and geopolitical risks, the G20, one would hope, has been forced into a consensus by the strange mix of military, diplomatic and economic challenges all around. Efforts towards plugging tax loopholes to thwart those exploiting a global playground is another welcome step. We cannot have multinationals behaving like mavericks in a coordinated global economic regime. An emphasis on international labour mobility is laudable. For India, betting on a young, skilled population, it can be a long-term positive. All in all, the Antalya consensus should evoke a collective sigh of relief, though there is a long way to go.?
Hindustan Times, November 19, 2015