Nothing really “new” was discussed, however, and none of this had to be done together in person, reports Simon Johnson for Forbes.
The leaders agreed on proposals aimed at restoring global growth and preventing future financial upheaval, AFP reports.
The value lies in the symbolism in having leaders from emerging markets at the same table as leaders from industrialized nations for the first time ever. It is possible that the rather vague discussion of fiscal stimulus could provide political cover for various countries to increase spending or cut taxes in the near future.
The weight remains on China to put in place an appropriate fiscal stimulus and is the only major country to take into account the International Monetary Fund’s (IMF) call for coordinated fiscal expansion. The truth is China is only 6% of the world’s GDP and the effect on global growth would not be substantial. Europeans are next to outline a more definite fiscal policy.
At the next summit, in April 2009, we can reasonably hope that President-elect Barack Obama will be fresh from signing a large fiscal package.
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