Frank Fuhrig Washington
The Group of 20 major advanced and emerging economies on Friday identified boosting investment in infrastructure as “critical” for hopes to spur global economic growth.
“While some key economies are recovering, others face renewed weakness,” G20 finance ministers and central bankers said in a joint statement after meeting in Washington.
“But we have emerged with optimism. We are determined to achieve outcomes that will strengthen the recovery.”
Australian Treasurer Joe Hockey said the G20 members had agreed to a global infrastructure initiative, which over several years would boost the “quality and quantity of infrastructure across the G20 and beyond”.
The G20 plan is meant to raise global gross domestic product by 1.8 percent over five years, adding $2 trillion (R22 trillion) and millions of jobs to the world economy.
The G20 meeting was held on the sidelines of the annual meetings of the International Monetary Fund (IMF) and World Bank. The IMF last week issued a forecast for annual global expansion of about 3.5 percent for 2014-15, amid stalling recoveries in the euro zone and Japan.
It warned that the world economy could get stuck in a cycle of “mediocre” growth, and recommended both streamlining economic reforms and greater infrastructure spending.
“Investment in infrastructure can be a good way to support growth in the short term by putting people to work, by launching major construction efforts or maintenance jobs,” IMF chief Christine Lagarde said, “but can also impact on the supply side in the medium term by facilitating and accelerating the creation of value down the road.”
The World Bank on Thursday launched a new effort to link investors with infrastructure projects in capital-starved emerging markets and developing countries.
It estimates that such countries need to double their combined $1 trillion in annual infrastructure spending through 2020.
Hockey said there was “no doubt” of a need for infrastructure – from roads and sewers to airports and high-speed internet links.
Current low interest rates could help governments with room to borrow on their balance sheets.
“Now is the time to move... when there is a tremendous amount of private money looking for investments,” Hockey said. “All the finance ministers know that. There is massive demand for infrastructure over the next 30 years.” – Sapa-dpa