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G20 preview: New energy for world economy


09-03-2016 01:35 BJT

Full coverage: G20 Hangzhou Summit

How can the world’s strongest economies better collaborate to increase growth and address some of today’s mounting challenges? Our U.S. correspondent Liling Tan previews the high-level meeting and what some American economists are looking out for.

The key issue expected to dominate September’s G20 Summit in Hangzhou, the slowdown in global growth.

"Clearly it’s slow growth. I mean, in a word. Basically, what can harm the world much quicker than anything else is very slow growth and unequal growth, and right now we are subject to both," Stephen Leeb, research chairman of Leeb Group, said.

"There’s no way to, in effect, get global growth, get domestic growth — whether you’re talking about China, the U.S., Canada, Japan, Germany, France, Britain — you can’t really get that expansion of real GDP going unless you have a sense of coordinated policy," Steve Blitz, chief economist with M Science, said.

And that’s where the G20 comes in. Comprised of the strongest global economies, the group accounts for about 85 percent of the world’s economy, and 80 percent of the trade. It meets every year to discuss and promote global financial stability.

This year, economists like Steve Blitz and Stephen Leeb hope the summit can fix key economic issues, especially in this time of uncertainty stemming from China’s slow-down to Britain’s exit from the European Union, from a likely U.S. interest rate hike to fears of a currency war.

Their wishlist for the G20 summit includes coordinated policies to address issues like trade surpluses and trade protectionism, plans to increase fiscal spending and ways to deal with currency manipulation.

"As an investor, there is no doubt. I want to see a commitment to infrastructure, a commitment to fiscal spending, and when it comes to Europe, a willingness to drop this extreme austerity, which is getting us nowhere, it’s exacerbating inequalities, and I think it’s going to basically lead to a very difficult world situation," Stephen Leeb, research chairman of Leeb Group, said.

"In the end, two things really need to happen… the first is coordinated fiscal policy to increase demand in various countries./ The second part which I think is somewhat more doable, but it’s doable over years, not one G20 meeting, is to address currency," Steve Blitz, chief economist with M Science, said.

And both say when the 20 economic powerhouses meet on September 4th and 5th, it needs to be more than lip service. Leaders need to find solutions, agree on them, and then follow through.

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