This week could see a turning point in the global economic crisis - or at least a firebreak against the further spread of financial meltdown.
Leaders of the world's richest and biggest nations are expected to intervene decisively in the economic turmoil at this week's London G20 summit.
The potential
upside for New Zealand would be renewed confidence and economic stability among some of our key trading partners.
The G20 will see United States President Barack Obama at his first foreign summit and involve national leaders from across Europe, Asia and the Americas.
While international reports still suggest division between Europe and the US over calls for the G20 to back a big, co-ordinated global fiscal stimulus package, it is increasingly likely the summit will opt to: double the size of the International Monetary Fund and give developing countries more access to its money; push for colleges of regulators of global finance; regulate international hedge funds; register credit-rating agencies; crack down on tax havens.
While individual countries have bailed out banks and industries, guaranteed credit and spent up on infrastructure to promote jobs and economic demand, the G20 also aims to upgrade global financial systems and protect free trade.
The World Trade Organisation has predicted that global trade volumes will fall nine per cent this year, the worst fall since World War II, but 17 of the G20 nations have implemented indirect trade barriers to bolster their domestic industries since the last summit in November.
A leading British economics commentator, Will Hutton, predicted in the Observer newspaper yesterday: "There will be a deal that will create a new regulatory architecture for global finance."
The summit deal would "radically reduce the casino tendencies of the shadow financial system, make prices less volatile, help restore confidence in banks, challenge the bonus culture and promote flows of capital into poorer countries."
However that would be insufficient if commitments to boost demand next year failed.
- OBSERVER, AGENCIES
