G20 Meeting to Focus on Global Growth

The market turmoil sparked by the Federal Reserve’s steps toward removing the U.S. economy from life support is expected to be a top agenda item when finance chiefs from the world’s biggest economies meet in Sydney this weekend.

The Group of 20 finance ministers and central bankers meeting is a precursor to the main G-20 summit that will be held in the Australian city of Brisbane in November. The meeting’s host, Australian Treasurer Joe Hockey, said the Federal Reserve’s decision to begin scaling back its stimulus will be a key part of discussions, along with reinvigorating global growth.

In December, the U.S. central bank said it would start reducing its monthly Treasury and mortgage bond purchases, intended to keep interest rates low and support economic recovery in the aftermath of the global recession. Investors responded by pulling out of emerging markets and funneling their money to the U.S. in hopes of higher returns, which contributed to sharp falls in stock markets and the currencies of some developing countries.

The G-20, which represents around 85 percent of the global economy, is made up of both wealthy nations and emerging economies from the United States to Saudi Arabia and China.

In a paper prepared for this weekend’s meeting, the International Monetary Fund warned advanced economies to avoid prematurely rolling back their stimulus programs. But Hockey has defended the Fed’s decision, saying the U.S. has a responsibility to do what is best for itself.

via Mainichi

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