Priorities for the G20: The St. Petersburg Summit and Beyond

About the series

The G20 summit in St. Petersburg, Russia will be held on September 5-6, 2013, and will mark the eighth time the G20 heads of government have met. The summit will bring together the leaders of the world's major advanced and emerging economies, with a focus on developing policies aimed at improving sustainable, inclusive and balanced growth, and jobs creation around the world. CIGI experts present their perspectives and policy analysis on the key priorities facing the G20 at St. Petersburg, including macroeconomic cooperation, sovereign debt management systems and stimulating international development.

In the Series

Tail risks for the global economy have receded vis-à-vis last year, but this has not translated into higher growth in many advanced economies. Emerging economies, which have made considerable contributions to global economic growth since the height of the international financial crisis, are slowing down. In its latest round of forecasts in July, the International Monetary Fund (IMF) downgraded its growth projections, especially those for the emerging economies, and the Washington-based institution may provide G20 leaders with a new set of downward-revised projections in St. Petersburg in September.
The economic crises that began with Greece and spread through Ireland and the southern periphery of Europe were path-breakers. They occurred in countries embedded in a major currency area (the euro zone), they dispelled the notion that debt crises are the provenance of emerging market countries and they have proved remarkably resistant to global bailout assistance. Now, as G20 leaders prepare to meet in St. Petersburg, Russia — more than three years into the crisis and without an obvious endgame in view — a serious question they should consider is whether these are the first of a bigger, more complex, and more-difficult-to-resolve kind of crisis that will define the future global landscape.
The political dimensions of Russia hosting the G20 in September are generally overlooked, but they deserve more attention. The success of the St. Petersburg meeting is very important to Russia politically, and to President Vladimir Putin personally. Putin would like to show Russians that he is a world-class leader and that Russia should be taken seriously.
Much has changed since the crisis-driven G20 summits in London and Pittsburgh in 2009. The London summit promised action to strengthen regulation and supervision of financial institutions as well as improved cooperation, notably in launching an early warning “exercise” and work on “exit strategies.” The Pittsburgh summit promised an end to an “era of irresponsibility” and noted that the leaders’ prompt and aggressive policy response “worked” by planting the seeds of a return to stability following a global economic contraction. Echoing the sentiments of the London summit the leaders also committed their governments to “… avoid any premature withdrawal of stimulus. At the same time, we will prepare our exit strategies and, when the time is right, withdraw our extraordinary policy support in a cooperative and coordinated way, maintaining our commitment to fiscal responsibility.”
According to Thai legend, albino elephants were regarded as holy. If a Thai king became dissatisfied with a subordinate, the king would give him the “gift” of a white elephant. Keeping a white elephant was very expensive and, in most cases, would ruin its owner, as they would have to provide special food for the elephant as well as access for people to worship it. It may be that the development issue has a similar dimension for the G20. Does the positive value added by consideration of the development issue outweigh the burden? Is development a linchpin of the G20 agenda, since sustainable growth and prosperity in this interconnected world is dependent on the experience of developing and emerging countries? Or, is the development area a Potemkin village of intransigent issues?
Given the state of the global economy, unconventional monetary support should continue to be an important part of the policy mix to promote global economic recovery and growth. But is it enough? While the risks and concerns about the prolonged use of unconventional policies cannot be ignored, the more serious issue comes from a much broader policy perspective: that sustained global economic growth, sufficient to absorb economic slack, has not yet been firmly established.