"The global recovery is strengthening but is still uneven and downside risks remain," said the UNSW Business School's Professor Moshirian. "There is a need to reduce excessive imbalances and maintain current account imbalances at sustainable levels by strengthening multilateral cooperation."
Against that backdrop, the G20 meeting of finance ministers which starts on 13 November plans to announce an increase infrastructure spending and act on about 900 measures from member countries ranging from labour market deregulation to law reforms to open up markets to greater competition.
Professor Fariborz Moshirian, Director of the Institute of Global Finance said "this comes as the IMF has trimmed its global outlook, down to 3.3 per cent this year and 3.8 per cent in 2015, after warning about downsides from the past, and forces from the anticipated future."
The IMF has now cut its current-year growth forecasts nine out of 12 times in the last three years as it consistently overestimated how quickly richer countries would be able to pull free from high debt and unemployment in the wake of the 2007-2009 global financial crisis.
At the previous G20 finance ministers meeting there was a compromise agreement on imbalance indicators. Professor Moshirian says "the ministers from the G20 nations were clearly aware that the global recovery is stronger. However we need to strengthen multilateral cooperation."
At the G20 finance ministers meeting they will discuss issues including the external imbalance composed of the trade balance and net investment income flows and transfers, taking due consideration of exchange rate, fiscal, monetary and other policies.
Ministers and central bank governors have now agreed a list of indicators. This includes private savings and borrowing, public debt and fiscal deficits, and the trade balance including net investment flows.
Fariborz Moshirian analyses the global economy, and said "the international monetary system has proven resilient, but vulnerabilities still remain. Policies need to be adopted for prudential measures to deal with potentially destabilising capital flows. For this there needs to be a coherent approach, which has been lacking in previous G20 meetings."
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AGSM Scholar, Professor, Director of the Institute of Global Finance
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