G20 Meeting Will Highlight Global Wealth Divide

The world’s rich nations pushed back on Friday against emerging market complaints about the spillover effects of their monetary policies, saying they had to get their own houses in order and get with the agenda of boosting global growth.

As finance ministers and central bank chiefs from the Group of 20 developed and emerging countries gather ahead of a weekend meeting in Sydney, many are already talking at cross purposes.

Emerging nations want the U.S. Federal Reserve to calibrate its winding down of stimulus so as to mitigate the impact on their economies and financial markets. Developed members reply that the troubles in the emerging world are mostly homegrown and domestic interest rates have to be set with domestic recoveries in mind.

A draft of the communique, reported by Bloomberg News, highlighted how the push for growth had trumped concerns about volatility in emerging markets that had threatened to overshadow the meeting.

“We commit to developing new measures to significantly raise global growth, while maintaining fiscal sustainability,” Bloomberg quoted the draft as saying.

“We recognize accommodative monetary policy settings in advanced economies will need to normalize in due course, in line with stronger growth.”

Developed market policymakers see little risk of the recent market turmoil spiraling into the kind of contagion which prompted concerted and coordinated action from the G20 following the global financial crisis.

“Emerging markets need to take steps of their own to get their fiscal house in order and put structural reforms in place,” U.S. Treasury Secretary Jack Lew said at a financial conference in Sydney ahead of the ministerial meetings.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza