Policymakers of the Group of Twenty (G20) nations will meet this week in the Russian city of St. Petersburg for the eighth time to take the pulse of the global economy and strive to prescribe a remedy.
Though no instant cure is expected for the world economy which is suffering a toddling recovery and sluggish growth, a common strategy to maintain strong economic growth is needed for both developed countries and emerging economies of the 20-member group, experts said.
Strong growth as common goal
Russia, which holds the G20 rotating presidency this year, outlined a strategic agenda aimed at igniting a new cycle of economic growth through stimulating investment, boosting market confidence and transparency, and improving regulatory effectiveness.
Against the backdrop of volatile financial markets and high unemployment rates worldwide, President Vladimir Putin said in his recent address concerning the upcoming St. Petersburg summit that the key objective of the G20 at this moment is to "achieve a strong, sustainable and balanced growth."
According to Ksenia Yudaeva, Russia's G20 Sherpa and chief of presidential experts' directorate, the cyclical nature of economic activity could partially explain the recession in Europe, but a lack of fresh sources for growth is the major cause of the global economic slowdown.
The official highlighted the role of investment in boosting economies, as investment "is clearly the long-term and new source for growth," she told Xinhua.
Russian G20 organizers said that "important decisions" are to be made to stimulate investment. A roadmap for long-term investment and finance has been formulated and will be implemented during the Australian Presidency.
For emerging markets, structural reforms are needed to increase economic efficiency and labor productivity and bring about a shift of the workforce from less efficient sectors to more efficient ones, Yudaeva noted.
Global governace for common interests
In a globalized world where individual economies become increasingly intertwined, monetary or fiscal measures adopted by a certain country can easily send ripples to the rest of the world. Under such circumstances, policy coordination, or even a global governance system, rather than short-term palliatives, is needed to help achieve steady economic growth, experts said.
For example, analysts said, to address the spillovers of the US Federal Reserve's move to taper down quantitative easing, early-warning from the US authorities and coordination of emerging markets are required, which should be further discussed at the summit.
Besides possible macroeconomic policy coordination, experts saw a G20-drafted document addressing global taxation reform as a major achievement of global governance within the multilateral framework.
As Putin once said, the G20 Action Plan on Base Erosion and Profit Shifting, mainly tackling international corporate tax avoidance, could be seen as "the most prominent step towards modernization and coordination of our countries' tax policies in 100 years."
As for possible discussion of a common fiscal strategy for all G20 members during the summit, Russian officials scrapped the so-called "unified approach" due to different recovery rates in different countries. Still, the ultimate goal is to improve member states' fiscal situation in the medium term, Yudaeva said.
Facilitating the reform of the international financial system and establishing a new quota formula of the International Monetary Fund (IMF) also call for coordination among the member states. Reform and restructuring could continue only when each member accommodates both national and common interests, experts said.
During the two-day summit, Russian G20 organizers expect world leaders to support the process of IMF reforms and increase emerging countries' quotas in managing the IMF in an effort to build a balanced global financial system.