{{The Group of 20, which united in response to global crisis in 2009, now faces a U.S. economy picking up, Europe lagging and developing economies facing blowback from the looming ‘taper’ of the Federal Reserve’s monetary stimulus.}}
“Our main task is returning the global economy towards steady and balanced growth. This task has unfortunately not been resolved,” Russian President Vladimir Putin told leaders as they met at an annual summit in St. Petersburg.
Leaders signed off on a jobs and growth initiative, as well as steps to combat international tax evasion and tighten financial regulation. But concerns persisted that renewed market turbulence could hit developing economies hardest.
“Systemic risks, the conditions for an acute crisis relapse, persist,” Putin said.
The summit was overshadowed by great-power tensions over the Syria crisis, with leaders addressing security matters over dinner after their traditional debate on a world economy that is doing slightly better than a year ago.
Departing from his prepared remarks, Putin avoided explicitly referring to risks arising from U.S. monetary policy. But the message from the BRICS caucus of emerging markets, which met earlier, was unmistakably aimed at Washington.
The BRICS announced they would commit $100 billion to a currency reserve pool that could help defend against a balance of payments crisis, although the mechanism will take some time yet to set up.
“The eventual normalization of monetary policies needs to be effectively and carefully calibrated and clearly communicated,” Brazil, Russia, India, China and South Africa said in a joint statement.
That language reflected the text agreed by G20 finance ministers in Moscow in July. Russian Deputy Finance Minister Sergei Storchak said a passage on so-called “spillovers” would be unchanged in the closing summit communiqué.
A Japanese government official said that at finance ministers’ talks over dinner, no countries were explicitly critical of the Fed although it was discussed at length.
Even among emerging powers there were sharp messages.
China and Russia said vulnerable countries, including G20 member India, will need to take steps to rebalance their economies, ruling out bailouts for countries that have hit trouble.
Washington, while playing up its contribution to growth, said emerging economies would have to do their homework as it dials back its expansive policy settings.
“Emerging economies, increasingly … will have to look within their own borders for demand,” Deputy National Security Adviser Ben Rhodes said.
{agencies}
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