The G20 has agreed to develop "ambitious but realistic policies" to lift global growth by more than 2 per cent over the next five years, while pledging to better co-ordinate central bank decisions that could cause economic and market volatility.
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G20 to boost growth by trillions
The G20 world finance ministers and government bankers have agreed to lift global growth by more than 2 per cent equating to US$2 trillion over the next five years by increasing investment, employment and enhance trade.
The focus on a target at the conclusion of the G20 meeting in Sydney will be seen as a win for federal Treasurer Joe Hockey, who pushed for a "tangible" growth goal ahead of the meeting this weekend.
"We will develop ambitious but realistic policies with the aim to lift collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming five years," the final communique from the group of rich and developing nations, which control more than 80 per cent of the world's economy, said on Sunday.
Mr Hockey said the G20 had achieved a great deal, but important challenges remained.
"Our policies could deliver over $US2 trillion more in real economic activity and tens of millions of new jobs," he said. "We know structural reform is hard but we have no choice."
Mr Hockey said the G20 had achieved a "major step forward" by putting a solid number on aspirations for global growth.
The G20 nations said that, to achieve the growth target, they would "take concrete actions across the G20, including to increase investment, lift employment and participation, enhance trade and promote competition, in addition to macroeconomic policies".
The focus of growth comes more than five years after the G20 was upgraded to a leaders' meeting following the financial crisis. The moves this year by developed countries to wind-back their ultra-loose monetary policies, which were put in place to support their economies, sparked ructions in financial markets over the past two months.
Jack Lew, the Secretary of the US Treasury, said the decision to focus on growth was a “significant” development on past meetings where austerity was still being debated.
“As we look across the world, we see a global economic recovery but one in which activity remains weak and global demand is still deficient,” Mr Lew said on Sunday.
“That’s why the decision in Sydney to focus on growth strategies is so significant.”
Christine Lagarde, head of the International Monetary Fund, said the plan to boost collective GDP over the next five years was a welcome one.
“This goal is attainable and is in line with IMF analysis presented to the G20 this week,” Ms Lagarde said.
The G20 communique from finance ministers and central bankers said the normalisation of monetary policy would be a "positive for the global economy", with "reduced reliance on easy monetary policy ... beneficial on the medium term for financial stability".
"All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy."
While the reduction in stimulus could "lead to excessive volatility" and damage growth, the G20 said its "primary response is to further strengthen and refine our domestic macroeconomic structural and financial policy frameworks".
"Some economies will need to rebuild fiscal buffers where policy space is eroded. We will consistently communicate our actions to each other and to the public and continue to cooperate on managing spillovers to other countries and to ensure continued effectiveness of global safety nets."
The G20 added that they "deeply regret" that reforms to the International Monetary Fund (IMF), which would have given a bigger say to developing economies, had not yet come into force.