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G-20 sticks to 2% growth goal despite headwinds

President Barack Obama (L-R) departs with Germany's Chancellor Angela Merkel and Brazil's President Dilma Rousseff after participating in a family photo with fellow world leaders at the start of the G20 summit at the Regnum Carya Resort in Antalya, Turkey, November 15, 2015.
Jonathan Ernst | Reuters
President Barack Obama (L-R) departs with Germany's Chancellor Angela Merkel and Brazil's President Dilma Rousseff after participating in a family photo with fellow world leaders at the start of the G20 summit at the Regnum Carya Resort in Antalya, Turkey, November 15, 2015.

The leaders of the world's largest economies stuck to a goal of lifting their collective output by an extra 2 percent by 2018, even though growth remains uneven and weaker than expected globally, they said in a statement on Monday.

In their final communique from a summit in Turkey, the leaders of the Group of 20 (G20) also endorsed plans to address the refugee crisis, taxation, climate change, cyber security and inequality, signs the grouping is increasingly willing to widen its focus beyond hard economic issues.

"We remain committed to achieving our ambition to lift collective G20 GDP by an additional 2 percent by 2018," the leaders said.

"Our top priority is timely and effective implementation of our growth strategies that include measures to support demand and structural reforms."

The leaders said they would "carefully calibrate" and "clearly communicate" policy decisions, a nod to the sensitivity of financial markets, which have seen dramatic moves this year on expectations of a U.S. interest rate hike.

The communique, largely unchanged from the draft document reported by Reuters on Sunday, also emphasised previous exchange rate commitments and pledges to resist protectionism.

But at least one delegate noted the difficulty of coordinating policy at a time when growth is patchy, and economies diverge sharply.

"We have seen economic trends, as well as policies of major economies, have displayed different directions and it has become more necessary to coordinate macroeconomic policies," Wang Xiaolong, China's special envoy on G20 affairs, told reporters.

"The difficulty in such coordination is also rising. We have seen that trade is declining as well as commodity prices which continue to fluctuate... and there have been some fluctuations on the financial markets."

Thorny issue

Diverging monetary policy has been a thorny issue for financial markets and policymakers this year, as the U.S. Federal Reserve looks likely to hike rates, while much of the rest of the world struggles to kick-start growth.

Expectations of a U.S. hike have boosted the dollar, often to the detriment of emerging market currencies.

In sharp contrast to the United States, much of the rest of the world, including China, remains vulnerable. The European Central Bank has underlined readiness to extend money printing to boost weak growth and inflation in the euro zone.

Data from Japan on Monday showed the world's third-largest economy slipped into a recession in July-September.

The leaders also endorsed a set of measures designed tackle corporate tax avoidance, although questions remain about whether countries will follow through on the plans or leave loopholes that multinationals can exploit.

The Base Erosion and Profit Shifting (BEPS) measures aim to close the gaps in existing international tax rules.

They were triggered by public anger over reports that huge multinational corporations like Starbucks or Google get away with paying almost no tax at all because they skilfully exploit legal loopholes, or get preferential tax deals from governments.

Addressing one of the year's most pressing issues, the leaders pledged a "coordinated and comprehensive" response to the refugee crisis that has left millions displaced, promising to help refugees find education, healthcare and work.

They also endorsed a goal to limit the impact of climate change, as well as measures to help developing economies adapt to tougher climate regulations.

Still, some charities pointed out that the work on climate change was not enough.

"G20 leaders have shown, in their commitments to refugees, that where there is a political will there's a way," said Steve Price-Thomas, a spokesman of charity Oxfam.

"They must now demonstrate the same level of leadership on the equally critical issues of climate change and inequality."