A part from agreeing on a set of indicators to measure economic imbalances, the Group of 20 emerging and developed economies that met in Paris last week shared the observation that rising prices of primary industry commodities including food are becoming a risk factor for the global economy.
Finance ministers and central bankers from the G20 economies agreed to analyze the causes of excessive price fluctuations, such as the inflow of speculative funds, and collect statistical data on such matters as food stocks.
In discussing the set of indicators for gauging economic imbalances, China, which has huge trade and current accounts surpluses, and developed economies, such as the United States, Europe and Japan, aired opposing views. They agreed to use public debt, fiscal deficits, private savings rate and private debt as indicators. They also agreed to use an indicator close to trade balance, instead of current accounts balance, by accepting China’s stance. They stopped short of concrete discussions to reform China’s currency, the renminbi.
On the world economy, the G20 statement said, “The global recovery is strengthening but is still uneven and downside risks remain.” The risks include possible overheating of emerging economies and uneasiness about Europe’s financial and debt situation.
The two-day meeting was studded with conflicting views from emerging and developed economies. French President Nicolas Sarkozy, who hosted the meeting, said in his opening speech that placing priority on the interests of one’s country would mean death of the G20. It is imperative that the G20 countries pursue policy coordination to ensure sustainable global growth.
It is said that food price hikes are behind prodemocracy demonstrations in Middle East countries, including Libya and Bahrain. The U.N. Food and Agriculture Organization foresees a 31 percent, 24 percent and 35 percent rise in rice, wheat and corn prices, respectively, by 2020 from 2008.
Japan, which imports a large amount of food and industrial raw materials, should step up efforts to coordinate with G20 countries toward price stability.
