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Doubts cloud G-20's latest global growth target

The G-20 group of finance ministers and central bankers gathering in Sydney has wrapped up. Flights are boarded and interviews written up, but once again it leaves a bitter taste in our mouths. It feels as though, once again, the G-20 nations have had to justify their gargantuan and logistically complex meetings by producing a communiqué with meat on the bone, rather than another lean and flavorless statement.

Often criticized for comprising too many nations and acting as little more than a talking shop, the G-20 club of finance ministers and central bankers has yet again sought to free itself of that image.

(Read more: Frail EMs hot topic for G-20 meeting)

In its communiqué, the G-20 announced it aims to boost the world's gross domestic product (GDP) by an extra 2 percentage points -- or the equivalent of $2.25 trillion -- over the next five years.

What a catchy headline! That target does sound impressive. Even more so, it sounds refreshing as the world's financial policymakers have finally been able to pivot from crisis-fighting mode to looking at getting economic growth back on the right (upward) trajectory.

However I'm not entirely convinced whether its latest pledge will give the G-20 the much needed credibility. Here are three reasons why:

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First of all, the plan lacks much-needed details. While the IMF, whose researchers have first floated this proposal, stress the growth target should be achieved via structural reforms while maintaining fiscal prudence, I fail to see a clear roadmap for which measures will be taken by the world's biggest economies. The G-20 agreed to present more detailed growth plans at their November summit, but that is still more than seven months away, leaving many of wondering how hollow that promise is.

(Read more:IMF's Lagarde confident on 'action-oriented' G-20 plan)

Second, the target is not binding and there are no enforcement measures for countries that do not encourage growth by as much as the G-20 demanded. Stephen Lewis, Chief Economist, Monument Securities writes: "in practice, such a commitment would not impose an obligation on any government to do anything it had not, in any case, intended to do. That's why it is simply impractical"

And third, I'm highly critical of setting rigid growth targets. Call me a nay-sayer, a pessimist. A target of any kind may sound ambitious and optimistic, but it often sets wrong incentives. Look at European corporate giants like Siemens whose chief executive Peter Loescher was forced out last year over missing financial targets.

The crux of the issue was setting an ambitious revenue target which led to a plethora of low margin activities and value destructive deals. On a government level, this may equate to uncontrolled investment into low-yielding sectors and inefficient institutions, while neglecting to encourage the productivity of the labor force and its competitiveness in the world. It's the quality of the growth that matters, not the actual target. If setting a target doesn't work at the micro level, it probably won't work at the macro level.

Christine Lagarde, managing director of the IMF sought to defuse some of the criticism as she spoke to CNBC on the sidelines of the G-20 meeting : "The beauty of the plan is that it's going to rely essentially on domestic measures that will be beneficial for domestic markets (…) It's not some 'far-fetched plan out in the clouds"

Let's just hope government's ambitious growth targets won't be clouded by meeting any "feel-good" targets, but will focus on improving the dynamics of growth.

Carolin Roth is CNBC's London-based anchor for Capital Connection.

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