The G-20 was created in 1999, after the financial crises that had hit emerging countries from 1997 onwards. It includes the G7 group of major industrial companies, plus the main emerging economies, including the BRIC countries (Brazil, Russia, India, China). Its ministerial meeting this weekend became a preparatory session for its first-ever Heads of State meeting in Washington on Saturday, with the aim of developing “concrete policy outcomes”.
Encouragingly, China used the occasion to announce a $586bn stimulus package, to be spent by the end of 2010, focusing on rural development and infrastructure programmes. As Zhou Xiaochuan, governor of the People’s Bank of China, noted “if China can maintain domestic demand, its helpful for global stability”. The BRIC countries also announced measures to promote trade flows between themselves, in an effort to compensate for lost exports to the West.
The background to these efforts is a forecast from the International Monetary Fund that world growth in 2009 will be at a recession level of 2.2%, and less than half the 5% seen last year. The IMF also forecasts that “output in the advanced economies (US, Europe, Japan) will contract” next year. This would be the “first annual contraction since 1945″, and be “broadly comparable” to the major recessions of 1975 and 1982.