Europe again the black sheep at the G20 Finance Ministers and Central Bank Governors

Karel De Gucht, Member of the EC in charge of Trade, met with Michael Froman, US Trade Representative, in Sydney in the margins of the meeting of the Ministers for Trade at the G20 Summit (from left to right), (EC Audiovisual Services, 18/07/2014)

Karel De Gucht, Member of the EC in charge of Trade, met with Michael Froman, US Trade Representative, in Sydney in the margins of the meeting of the Ministers for Trade at the G20 Summit (from left to right), (EC Audiovisual Services, 18/07/2014)

Last weekend the much anticipated G20 Finance Ministers’ and Central Bank Governors’ meeting happened in Cairns, Australia. It was very supportive and positive as far as the implementation of the necessary measures to boost the global economic growth in terms of GDP by an additional 1.8 per cent till 2018. This will be done through investments in infrastructures and in the labor market. However, the negative contribution of Europe and China in terms of growth is an important issue that requires great attention.

G20’s measures to be implemented

Nearly a thousand measures, seven hundreds of which are new, will give a push to the global growth of 1.8 per cent by 2018. These measures will mainly target in the infrastructure and labor areas. In addition, the intention of the G20 to create a framework that will enhance the exchange information in order to eliminate tax evasion was announced by the French Finance minister, Michel Sapin.  It is true though that the target of 2 per cent growth that was set in February by the G20 was not accomplished and extensive measures must be taken.

U.S. economy is shining

The U.S. economy is doing very well in terms of adding more strength to the global economic growth. As Jacob Lew, the US Treasury Secretary stated: “The United States GDP grew by a robust 4.2% annual rate in the second quarter of this year. The unemployment rate is at a six-year low, and the private sector has created 10 million jobs in the last 54 months.” Furthermore, the forecasts are encouraging and will continue to this direction till the end of 2016. According to Jacob Lew’s sayings, it seems that the U.S. has learned their lesson from the global financial crisis and are driving the boat to a more prosperous economic environment.

Europe: “the black sheep”

The European economic growth was once more the topic in the agenda of the G20’s meeting. The downfall of the inflation and the rise of unemployment are the most important issues that require the implementation of short and long-term measures in order to be brought into normal levels as the US Treasury Secretary stretched out during his speech. And by normal he meant targeting inflation at close but below the 2 per cent level and helping unemployment levels fall by creating millions of new jobs. This can be done by increasing demand which will help the economy be more competitive and grow at a high pace.

China: a falling “giant”

The case of China didn’t bring as much attention as it should. The Chinese is one of the biggest economies in the world and it is strange the G20 Finance Ministers didn’t make any extended reference to the current situation of the country which is experiencing slow growth figures. Is it because they are confident that the economy will come back to previous high growth levels or they don’t want to intimidate the global community and cause turbulences in the international markets? Either way, the outcome remains the same since the additional growth GDP percentage will be affected by the Chinese economy.

The future

The G20 meeting has proven that we are in the right path for growth but many things have to be done, with the most important being the implementation of the aforementioned measures, in order to reach that long-term growth target. Thus, November is very crucial because the G20 summit will take place and these proposals will be formalized and put into action. Let’s hope that these measures will help the global economies and especially Europe to grow, create more job opportunities in the labor arena and form a positive environment through less bureaucracy and more credit for people who want to start their own businesses.

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