By Bob Davis
WASHINGTON -- The leaders of the Group of 20 nations said that they would collectively spend more than $5 trillion trying to insulate the global economy from the impact of the coronavirus pandemic and help speed a recovery.
The commitment to coordinated stimulus was the largest the G-20 members have made since the global financial crisis of 2008 and 2009, an event that prompted creation of the leaders' summits. Back then they met in Washington and then London. On Thursday's call, they spoke by videoconference, reflecting the changed nature of the threat to the global economy.
"We commit to do whatever it takes and to use all available policy tools to minimize the economic and social damage from the pandemic, restore global growth, maintain market stability, and strengthen resilience," the G-20 said in a statement.
But the group didn't put forward a specific plan to address the coronavirus challenge, perhaps reflecting the limited time that the group had to arrange the session in face of the rapidly spreading pandemic. "They would have needed a lot of time to come up with a detailed action plan," said Maurice Obstfeld, a former International Monetary Fund chief economist. The statement is "long on generalities, short on specifics."
The G-20 is an informal collection of countries that make up about 80% of the global economy, according to calculations by Homi Kharas, a Brookings Institution economist. It includes industrialized nations such as the U.S. and Germany, emerging powerhouses like China and India and such oil-rich nation as Russia and Saudi Arabia. This year, Saudi Arabia is the host country.
The group has no independent power but tries to coordinate actions and generally relies on the IMF and World Bank to act as its staff.
During the videoconference, leaders read their formal statements and approved the group communiqué, said people familiar with the meeting. There was little give-and-take. During in-person summits, most of the substantive meetings occur on the sidelines of the sessions. During the last two in-person G-20 meetings, in Buenos Aires and Kyoto, President Trump and Chinese President Xi Jinping met to try to end their ongoing trade war. They arrived at truces, which didn't hold.
The group's inclusiveness makes it difficult for it to act. For instance, U.S. Secretary of State Mike Pompeo has been trying to use the session to convince Saudi Crown Prince Mohammed bin Salman to end its oil fight with Russia, which has driven down energy prices. But the G-20 also includes oil importers like India, which may prefer to keep prices low and Russia, which may not be willing to back down from its confrontation with Saudi Arabia.
There wasn't a mention in the statement of oil or energy policy.
The group did, however, say that they were expecting global trade to play a big role in any recovery. During the global financial crisis, the G-20 forswore protectionism -- a pledge that economists said did reduce the number of protectionist measures that were erected at the time. But the U.S. under Mr. Trump had that declaration removed from G-20 leaders' communiqués since early 2017.
Now the group showed a renewed concern about trade barriers, especially since a number of countries erected export bans on medical equipment. "We will work to ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders, and work to resolve disruptions to the global supply chains," the statement said.
The G-20 also showed some sympathy to an IMF and World Bank request that governments suspend debt payments from the world's poorest nations. But it didn't formally endorse that proposal. It also didn't agree to vastly increase IMF lending, as it did during the global financial crisis.
Write to Bob Davis at email@example.com
(END) Dow Jones Newswires
March 26, 2020 17:49 ET (21:49 GMT)
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