WORLD NEWS – WASHINGTON — The Group of 24 emerging and developing countries called on the central banks in rich countries to guard against spillovers that could wreak havoc on their economies. The G24, which includes emerging powers Brazil, India and South Africa that are driving global economic growth, laid the blame for the stuttering global recovery on the advanced economies.
“We remain concerned about the fragility and pace of the global recovery because of the protracted difficulties and uncertainties in many advanced economies, including the euro area and the United States,” the group said in a statement. “We call on advanced economies to take into account the negative spillover effects on the emerging and developing countries of prolonged unconventional monetary policies.”
The joint communique, issued after the G24 meeting on the sidelines of the IMF-World Bank annual spring meetings, urged the International Monetary Fund and the Bank to step up efforts to achieve more coordinated global economic policy-making. G24 chairman Luis Videgaray Caso, Mexico’s finance minister, said that the members had discussed the risks of the advanced economies’ uncharted monetary stimulus, including inflation and volatile capital flows and commodity prices.
More than four years after the US-centered financial crisis swept the globe, causing a world recession, “we’re still in the process of getting out of the crisis,” he said at a news conference. Most of the external factors from central bank stimulus are out of the domestic control of the emerging and developing countries, he said.
The G24 call for a strengthening of the financial regulation system and supervision was “more timely than ever,” he said. Capital inflows from monetary easing in the advanced economies “are likely to recede quickly,” he warned.
The G24 endorsed the World Bank’s goal of wiping out extreme poverty and raising shared prosperity by 2030, recently announced by Bank President Jim Yong Kim. The group also applauded the BRICS plan to create a development lender that would rival the Western-dominated World Bank.
“We welcome the agreement among the BRICS to establish a New Development Bank,” it said, noting that the vast infrastructure financing needs and the financing gap meant that “complementary mechanisms will also be important.” In late March, leaders from the BRICS — Brazil, Russia, India, China and South Africa — agreed to create a joint infrastructure lender.
The planned bank is seen as a way of gaining influence on the world stage, countering Europe’s dragging economic crisis and addressing the $4.5 trillion in infrastructure spending the BRICS are estimated to need over the next five years.