G20 pledges decisive monetary, fiscal action if needed - draft text

Mon Feb 9, 2015 9:48pm EST
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By Nick Tattersall

ISTANBUL Feb 10 (Reuters) - The Group of 20 (G20) leading economies will pledge to act decisively on monetary and fiscal policy if needed to combat the risk of persistent stagnation, according to a draft communique obtained by Reuters on Tuesday.

The communique, intended for adoption by G20 ministers later on Tuesday at a meeting in Istanbul, pointed to the risk of prolonged low inflation, sluggish growth and demand weakness in some advanced economies.

"Accordingly, we will continuously review our monetary and fiscal policy settings and act decisively, if needed," the draft document said.

The draft welcomed the favourable outlook in some key economies but gave a gloomy assessment of the global economy as a whole, saying growth was uneven and trade growth slow.

"In some countries, potential growth has declined, demand continues to be weak, the outlook for jobs is still bleak, and income inequality is rising," it said.

It noted slow growth in the euro area and Japan and said some emerging market economies were slowing down, while some low-income developing countries were seeing continued strong growth but with some recent moderation.

The draft communique welcomed the European Central Bank's (ECB) quantitative easing - despite German concern about the policy - and said the move would further support recovery in the euro area.

In a nod to expectations that the U.S. Federal Reserve will raise interest rates, the draft said some advanced economies with stronger growth prospects were moving closer to "policy normalisation".   Continued...