— This is the script of CNBC's news report for China's CCTV on February 24, Monday.
Welcome to the CNBC Business Daily.
With G20 leaders committing to a global GDP growth target of two percent over the next five years, CNBC's Oriel Morrison sat down with IMF Managing Director Christine Lagarde to find out exactly what that would mean:
Lagarde: I tell you what's the difference in my view after the meeting - it will be the focus that some of these finance ministers will have on growth - that clearly came out strongly. All of them have skin in the game, whether advanced or emerging markets, they all have interest in growing the economy and growing it better. So that was really, the rallying support for growth pursuit that was flagged by the Australian presidency for this meeting. It's action orientated if I may say.
Morrison: Well when you're looking at the number, we've got 5 years and an additional 2% over what we're looking at now. In terms of how it's going to work, with each economy doing its own thing, how is that coordination going to come back into play?
Lagarde: As I said, this 2% GDP objective is action oriented as you would expect from an Australian presidency. We were asked to put together a study, which we did, with models and hypotheticals, and that led to the conclusion that there could be an aditional 0.5% GDP per year over 5 years which gives us that 2% or 2 trillion dollars additional GDP which was endorsed by the G20. So it's one thing to identify, to endorse. Now it's a question of distilling on a per country basis what reforms will be needed in order to achieve those objectives and that's what the countries have agreed to do.
Morrison: If there's no policing of these obejctives, are you confident you will get what you hope for from each country?
Lagarde: The beauty of this plan is it's going to rely essentially on domestic measures that will be beneficial for the domestic market, and it's not a far fetched plan that's up in the clouds. It's really down to the domestic measures that will be beneficial to domestic markets. Which is a good alignment of interest between political leaders, finance authorities and the people in the countries where growth will be improved.
Morrison: Who's best placed in order to achieve these goals?
Lagarde: All of those who will deliver and implement reforms.
Morrison: All those who will? So you're expecting some particular that won't potentially pull their weight?
Lagarde: I'm not going to single any one of them, they all endorsed it.
Morrison: It seems that the Federal Reserve and its tapering program have really been the focus of the angst from some of the emerging economies. Do you believe that the pace of tapering currently is the right thing to do? One of the triggers for this angst was the fact that the Federal Reserve, not in its recent statement, but the one before that, didn't talk about volatility in the emerging markets.
Lagarde: First, I would observe that tapering in and or itself, as described and well communicated now by the Fed is an indication that the US economy is doing alot better. And that, in and of itself is a positive. Second, clearly during the discusssions yesterday and today, there was an open mind on the part of the Chairman of the Fed understand the issues and listen to the angst of the emerging markets. Equally, there was a recognition on the part of the emerging market economies that volatility and capital flow movement was of variable volumes and nature, depending on their respective situation. So you can't just put all emerging market economies in one bucket and assume that they are all the same. There are all different. Some of them have taken policy measures in order to reduce volatility and that has proven efficient.
Li Sixuan, from CNBC's Singapore headquarters.