International Commentary: The joint statement by the Leaders of the G20 reinforces their commitment to achieving sustainable economic growth, confirms pivot toward coordinated monetary and fiscal policy.
- Overnight the Leaders of the G20 released a joint statement promising to improve economic policy coordination amongst many other goals. More specifically, member nations agreed on utilizing monetary, fiscal, and structural policy tools to achieve "strong, sustainable, balanced and inclusive growth". Interestingly enough, the statement was adamant that monetary policy alone was unable to achieve balanced growth, and advocates the need for complementary flexible fiscal policy – mainly in the form of high-quality public investment – to aid in this quest.
As is typical at these summits, the Leaders of the G20 committed to implement social and structural reforms intended to improve the supply side of economies of the member nations. These include policies that promote innovation, increase productivity, reduce pollution, and other policies that are aimed at improving people's lives.
Additionally, the statement reinforced the commitment of member nations to build an open world economy, promoting global trade and investment instead of embracing protectionism. Moreover, they agreed to refrain from competitive devaluations and avoid targeting exchange rates for competitive purposes.
- The outcome of this weekend's G20 summit reinforces our view that global policymakers have begun to pivot away from monetary policy as the sole tool that is supporting the economic recovery after the Great Recession. Calls for additional policy stimulus by major international organizations such as the IMF and the OECD earlier this year appear to have finally been heeded by the leaders of the world's most economically important nations. The prospect of more fiscal stimulus bodes well for stronger global infrastructure investment going forward, and will be a key theme supporting our global outlook over the next few years.
Fotios Raptis, Senior Economist
This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.