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G20 meets to tackle global economic crisis

The leaders of the world's largest economies met in Washington on Saturday to coordinate their actions in tackling the global economic crisis.

The G20 (Group of Twenty) is made up of nineteen of the largest economies in the world plus the European Union. It represents 90% of the worlds GDP,  80% of world trade and two thirds of the world's population.

(image wikipedia)

The current economic crisis started with the collapse of the excessive housing values in the United States putting pressure on subprime mortgages. This lead to the collapse of a number of US banks and the subsequent tightening of inter-bank lending worldwide. The current global economic crisis is widely regarded as the largest economic challenge since the Great Depression of the 1930's.

In Australia it is expected that there will be an extended period of recession with accompanying high unemployment. How bad this gets will depend to a large extent on what happens to China's growth rate. China consumes a huge volume of our mineral and gas exports.

The G20 leaders agreed to continue to fiscally stimulate their own economies as well as to support the International Monetary Fund and the World Bank to pursue similar actions in poorer countries. Fiscal stimulation involves pumping money into the economy by giving tax breaks or launching new infrastructure. An example would be the $1000 Rudd Christmas present as part of the already announced Government's $10.4 billion economic stimulus package.

The G20 meeting participants also discussed improving the transparency of the operation of financial markets in their countries to try to prevent a similar collapse in future.  They have set themselves a deadline of March 31st next year to put together proposals for better regulation of global financial markets.

(photo AFP)