Emerging economies call for more coherent response to crisis

19 Apr 13
The Group of 24 emerging and developing countries have raised concerns over the ‘negative spillover’ effect of advanced economies’ response to the global economic crisis and called for ‘greater coherence’ in policy making.

By | 19 April 2013

The Group of 24 emerging and developing countries have raised concerns over the ‘negative spillover’ effect of advanced economies’ response to the global economic crisis and called for ‘greater coherence’ in policy making.

In a communiqué issued last night on the eve of the International Monetary Fund and World Bank’s spring meetings, the , which includes Brazil, China and India among its members, noted that their growth continued to be ‘strong’ despite the weak performance of advanced economies.

But they raised concerns about the ‘fragility and pace’ of the global recovery. This was a result of the ‘protracted difficulties and uncertainties’ in many advanced economies, and in the eurozone and US in particular, it said.

‘More is needed to reduce uncertainties, restore confidence and strengthen growth,’ the statement said.  Specifically it highlighted the impact of unusual monetary policies, such as quantitative easing and credit easing, where central banks aim to improve liquidity and access to credit to encourage growth.

‘We call on advanced economies to take into account the negative spillover effects on emerging markets and developing countries of prolonged unconventional monetary policies, including on inflation and the volatility of capital flows and commodity prices,’ it explained.

The G24 urged the IMF and World Bank to be ‘more active in pursuing greater coherence in global economic policy-making’.

The World Bank also has a ‘key role’ to play in ing to fund the infrastructure needed to realise the G24’s goals for economic and human development, it said.

However, the communiqué noted that the scale of funding needed meant alternative, complementary mechanisms would also be needed.

In light of this, the group backed the agreement reached last month by the BRICS nations - Brazil, Russia, India, China and South Africa – to establish a separate development bank. The G24 said it looked forward ‘to further elaboration of the bank’s engagement with other emerging market and developing countries and relevant financial institutions’.

‘New and innovative’ solutions are also needed to increase the funding of the World Bank, the communiqué added.

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