G2O needs to apply tools for inclusive growth

The pledge made by the world’s leading economies to do more to lift global growth to deal with fallout from Britain’s Brexit vote and counter dissatisfaction with globalisation is important. These will definitely reverse the slowing global economic growth. With the focus of the British leave vote, the Group of 20 nations hoped to see the UK as a close partner of the EU through a smooth transition that addresses interests of both parties.
During the meeting in China’s southwestern city of Chengdu, the G20 finance officials said the global economic recovery was continuing “but remains weaker than desirable”.
The G20 group said in a communiqué that the outcome of June’s referendum “adds to the uncertainty in the global economy”.
But there is a silver lining. The G20 countries said they were “well positioned to proactively address the potential economic and financial consequences”. That is, they will encourage London and Brussels to part ways peacefully and in a manner that addresses interests of each party.
The communiqué repeated a pledge from an earlier meeting in the Chinese commercial hub Shanghai in February, that G20 would use “all policy tools”, including monetary easing, fiscal spending and structural change, to boost growth.
In reference to Germany which is reluctant to endorse the use of government spending to boost growth, seeing it as ineffective, it added action could be taken “individually and collectively” and called for “inclusive growth” to bring in those left out of economic prosperity.
The policymakers are determined to achieve strong, sustainable and balanced growth through concerted international cooperation to overcome challenges. Therefore, benefits of growth need to be shared more broadly within and among countries to promote inclusiveness.
With Brexit casting its shadow on the global and British economies, the International Monetary Fund (IMF) last week downgraded its forecasts for UK economic growth, from 1.9% to 1.7% for 2016, and for the global economy, from 3.2% to 3.1%. The data on Brexit seemed to bear out fears, with a British
business activity index posting its biggest drop in 20 years.
US Treasury Secretary Jack Lew said it was important for G20 countries to boost shared growth using all policy tools, including monetary and fiscal
policies as well as structural reforms, to help efficiency.
The group expressed optimism about being able to cope with the aftermath of the UK vote to leave the European Union, as Lew highlighted the importance of growth that is inclusive.
The financial chiefs’ focus on the essential role of structural reforms emphasizes that fiscal strategies are equally important to support common growth objectives.
The summit identified the challenges, which include the Brexit, China’s lackluster economic growth, terrorism and protectionism. This demonstrates that the leading world economies share interest to address them collectively so that all reap fruits of the economic growth.
By focusing on how best to tackle the Brexit, the finance chiefs reviewed the growth strategies and updated them to come up with the most credible one that address economic situation in each country, with focus on infrastructure development.