Protectionism fears and foreign exchange rates dominate arguments over deep imbalances in fragile world economy
 |
| G20 Activists – AFP image |
Phillip Inman and Patrick Wintour
Guardian
David Cameron arrived in South Korea tonight ahead of the G20 summit amid concerns that leaders of the world’s most powerful nations will fail to agree rules designed to safeguard the global economic recovery, defuse trade tensions and prevent a repeat of the financial crisis.
Gathering on a group of three islands specially built for the summit near Seoul, leaders will spend the next two days in fraught discussions about how to iron out the growing rifts between export-rich countries and debt-laden consumer nations. Protectionism and foreign exchange rates will be central to the debate.
The United States wants China to allow the yuan to rise faster and believes that Beijing is keeping its currency low to gain a trade advantage. But the US negotiators face a rough ride, especially in the wake of last week’s new $600bn round of quantitative easing, which has angered many G20 nations, including China and Germany, who believe the move is designed to weaken the dollar – boosting US exports – and ignores the global repercussions it is likely to provoke. Already the euro is at a two-year high against the dollar.
On the eve of the summit, World Bank president Robert Zoellick said the largest economies “need pro-growth policies, structural reforms, open trade and an anti-protectionist agenda”. He said that further support from governments to support growth would build confidence in private sector development.
Zoellick considers the return to growth in most developed countries to be fragile and is concerned that a slowdown next year could not only raise poverty levels in developing nations but also leave countries such as Ireland and Portugal to suffer deep cuts in wealth and social unrest.
Be the first to comment on "G20 summit at odds over global recovery pact"