After an acrimonious start to a G20 summit in Seoul, leaders closed ranks and agreed to a watered-down commitment to watch for dangerous economic imbalances. They also agreed to set "indicative guidelines" for measuring imbalances but offered investors little proof that the world was any safer from economic catastrophe.
Analysts' comments on the outcome of the summit follow:
LENA KOMILEVA, DIRECTOR, HEAD OF G7 MARKET ECONOMICS AT TULLETT PREBON:
"For the market, the G20 communique failed to guide investors toward a resolution for global imbalances or to address the key concern over global currency wars with references to countries that artificially deflate their currencies.
"On balance, this G20 meeting was a victory for emerging markets. The notable aspect in this communique was the mention of 'carefully designed macro-prudential measures' to address "overvalued flexible exchange rates" which hints in the direction of capital controls for developing markets."
DONALD STRASZHEIM, SENIOR MANAGING DIRECTOR, CHINA RESEARCH ISI GROUP:
"This is a changing, confusing period without historical precedent in the economic and financial area that I know of. As a consequence I believe Beijing is not going to be willing to agree to anything that binds them to some particular course of action in the future.
"With the 2008-09 meltdown, courtesy of America, and the 2010 euro crisis, courtesy of Europe, China wants to keep all options open."
SCOTT PAUL, EXECUTIVE DIRECTOR OF ALLIANCE FOR AMERICAN MANUFACTURING:
"The G20 wrapped up with a watered-down statement on global imbalances. However, much stronger action is needed to compel China into ending its market-distorting practices. Otherwise, the global imbalances they lament will continue to widen. And that would be bad news for American workers and manufacturers."
JULIAN JESSOP, CHIEF INTERNATIONAL ECONOMIST FOR GLOBAL ECONOMICS:
"The G20 Summit was always likely to be an exercise in damage limitation and in that respect it successfully papered over the many cracks between the positions of participants, at least for a few hours.
"There are also some advantages in a vague statement of principles that plays for time and allows countries to continue to move at their own pace. Nonetheless, even though the outcome could have been a lot worse, the new words on familiar issues have not added anything of substance."
DOMENICO LOMBARDI, PRESIDENT OF THE OXFORD INSTITUTE FOR ECONOMIC POLICY AND SENIOR FELLOW AT BROOKINGS INSTITUTION:
"By failing to agree on numerical targets for current account imbalances, the G20 has not managed to give teeth to its peer-review Framework for a Strong, Sustainable and Balanced Growth, casting doubt on the credibility of this whole effort.
"World leaders have thus missed a chance to preemptively act together on the macroeconomic front before markets force them to do so (again). But this should not overshadow their latest, quite ambitious achievements: a substantial reform package for reforming the IMF and an agreement on Basel III attained in a relatively short-time window."
DEREK SCISSORS, CHINA ECONOMIST AT HERITAGE FOUNDATION:
"Twenty people with very different backgrounds are unlikely to reach consensus on anything substantial. To forge such a consensus requires leadership. This week's G-20 meetings produced nothing of substance, which is no surprise because the United States did not lead."
MARC CHANDLER, GLOBAL HEAD OF CURRENCY STRATEGY, BROWN BROTHER HARRIMAN & CO:
"The G20 said that it was appropriate for countries to adopt capital controls to cope with potentially destabilizing inflows. However, as we expected, no sort of coordinated plan was in the making.
"Indeed, this simply maintains the status quo of countries taking unilateral actions to manage inflows. We do not expect any comprehensive multilateral solution for the capital inflow problem, simply because we do not think one really exists.
"Given recent developments in Europe, it appears that the G20 countries spent more time discussing Ireland than they did on global imbalances and currency stability."
KAREN SHAW PETROU, ANALYST AT FEDERAL FINANCIAL ANALYTICS CLIENTS:
"Our favorite bit in the G20 communique is its start, where one finds the ringing declaration that: "We, the Leaders of the G20, are united in our conviction that by working together we can secure a more prosperous future for the citizens of all countries." Whew! We thought for a while they were figuring out ways to argue with each other to promote poverty, war and the forces of evil.
"The reasons for this high-level circumlocution is two-fold: first, communiques from heads of state rarely say anything unequivocal because most agreements in principle break down in detail. And, at the Seoul summit, even agreements in principle were hard to find. The summit blessed Basel III, but little else from the high-faluting initial list of actions planned for them by the Financial Stability Board."
STEWART PATRICK, DIRECTOR, PROGRAM FOR INTERNATIONAL INSTITUTIONS AND GLOBAL GOVERNANCE AT COUNCIL ON FOREIGN RELATIONS:
"Three big take-aways from the Seoul summit:
"First, confidence in U.S. global economic leadership continues to wane. The Fed's decision to embrace more 'quantitative easing' undercut Obama's position at the summit.
"Second, the G20 is not an effective forum to pressure China, at least to date. U.S. officials had hoped to marshal support from countries hurt by an artificially undervalued renminbi. But--as at the June G20 meeting in Toronto--China deftly turned the tables, joining others in attacking U.S. monetary policy.
"Third, internal politics--including in the United States--will constrain G20 collaboration moving forward. Barack Obama arrived in Seoul immediately after his party was trounced in midterm elections, making his G20 counterparts skeptical of his ability to deliver on global commitments and, indeed, undermining his willingness to make bold moves that might backfire either with his Democratic base or the GOP majority in Congress.