US Federal Reserve chairwoman Janet Yellen, left, and International Monetary Fund managing director Christine Lagarde arrive at the opening session of the meeting of G20 finance ministers and central bank governors in Sydney at the weekend. Photo: Reuters

Sydney - The world’s top economies have embraced a goal of generating more than $2 trillion (R22 trillion) in additional output over five years while creating tens of million of new jobs, signalling optimism that the worst of crisis-era austerity was behind them.

The final communiqué from the two-day meeting of Group 20 (G20) finance ministers and central bankers in Sydney said they would take concrete action to raise investment and employment, among other reforms. The G20 accounts for 85 percent of the global economy.

“We will develop ambitious but realistic policies with the aim to lift our collective gross domestic product by more than 2 percent above the trajectory implied by current policies over the coming five years,” the statement said.

Australian Treasurer Joe Hockey, who hosted this year’s meeting, sold the plan as a new day for co-operation in the G20. “We are putting a number to it for the first time – putting a real number to what we are trying to achieve. We want to add over $2 trillion more in economic activity and tens of millions of new jobs.”

The targeted acceleration would boost global output by more than the world’s eighth-largest economy, Russia, produces in a year.

The deal was something of a feather in the cap of Hockey, who spearheaded the push for growth in the face of some scepticism, notably from Germany.

“What growth rates can be achieved is a result of a very complicated process,” German Finance Minister Wolfgang Schäuble said after the meeting. “The results of this process cannot be guaranteed by politicians.”

While shifting the focus to reforms that would lift and sustain global growth in years to come the group acknowledged that monetary policy would need to “remain accommodative in many advanced economies and should normalise in due course.”

The growth plan borrows wholesale from an International Monetary Fund paper prepared for the meeting, which estimated that structural reforms would raise world economic output by about 0.5 percent a year over the next five years, boosting global output by $2.25 trillion.

The IMF has forecast global growth of 3.75 percent for this year and 4 percent in 2015.

As yet there is no road map on how nations intend to get there or repercussions if they never arrive. The aim was to come up with the goal now, then have each country develop an action plan and a growth strategy for delivery at a November summit of G20 leaders in Brisbane.

“Each country will bring its own plan for growth,” Hockey said. “Each country has to do the heavy lifting.”

Agreeing on any goal is a step forward for the group that has failed to agree on fiscal and current account targets. It was a sea change from recent meetings where the debate was still on where their focus should lie: on growth or budget austerity.

Financial markets had been wary of the possibility of friction between advanced and emerging economies, but nothing suggested the meeting would cause ripples. – Reuters