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Wayne Swan G20 Intervention.doc

Wayne Swan G20 Intervention.doc

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Published by: peter_martin9335 on Feb 18, 2013
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05/14/2014

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WAYNE SWAN: INTERVENTION ON ‘FRAMEWORK FOR STRONG, SUSTAINABLE AND BALANCED GROWTH’

I think the debate we’ve heard in the last few weeks about so-called ‘currency wars’ is completely misguided and has unhelpfully reduced the focus on the G20’s critical agenda to boost growth and create jobs. Global growth with a ‘3’ in front of it simply won’t cut the mustard if we want to reduce the unacceptably high levels of unemployment in many of the major advanced economies. We need the world’s biggest developed economies to grow faster and stronger and start creating jobs for the 200 million people globally without a pay cheque and millions more struggling to put food on the table. We all agree that countries shouldn’t be targeting exchange rates for competitive purposes, but what we should support is domesticallyfocussed policies in the major advanced economies which are aimed at boosting growth and jobs. There is a big difference between indirect effects on market-exchange rates from accommodative monetary policy and actually engaging in competitive devaluation to get an artificial advantage for your export sector. Quite frankly, I think we’re seeing central bankers in the world’s biggest economies take unconventional measures to support growth and jobs because interest rates are already near-zero and fiscal policy is not providing enough support to growth. We need to see governments in many advanced economies get rid of the handbrake on growth that’s coming from damaging fiscal austerity.

You don’t need to slash and burn now to put your budget on a sustainable path over the medium term – in fact, cutting too hard now will rip the guts out of growth and leave you with higher debt later on. We have to get the world’s big economic engines firing again, while putting in place sound fiscal policy frameworks and the tough structural reforms that are going to support sustainable growth in the long run.

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