File photo taken on May 24, 2016 shows a music fountain in West Lake in Hangzhou, east China's Zhejiang Province. Hangzhou is the host city for the 2016 G20 summit on Sept. 4 and Sept. 5. (Xinhua/Huang Zongzhi)
For a world economy mired in a prolonged downturn, the G20 summit next month could be the light at the end of the tunnel.[Special coverage]
Eight years after the global financial crisis, the recovery remains slow and fragile. The current global economic growth environment is mediocre, featuring rising unemployment, soaring debt, sluggish trade and investment and turbulent financial and commodity markets.
Since the outbreak of the financial crisis, fiscal stimulus and monetary easing have played an important role in lifting growth. However, over-reliance on monetary policy, especially in some developed countries, has led to macroeconomic and financial instability elsewhere. The use of fiscal policies is also constrained in some countries due to high debt levels.
Added to the already complicated global political and economic situation, Brexit, trade protectionism and terrorism are exacerbating the problem, meaning nations are struggling to find suitable work-arounds to ensure the success of their stimulus packages.
Accounting for two thirds of the world's population and more than 80 percent of global economic output, G20 nations deserve, and are expected, to play a bigger role in managing the world economy. The upcoming summit is undoubtedly a prime opportunity, and has the potential to play a significant role in the rebooting of global growth.
The focus of the summit will be sustained global growth. As the host nation, China will use the conference to spur dialogue among developed and developing countries around the potential to foster growth through reforms and innovation.
While fiscal and monetary policies will address fluctuations in the short term, a longer-term strategy is needed to elevate the current malaise permeating the world economy. Reforms, structural adjustments in particular, must be incorporated into current policy frameworks to create fertile surroundings for growth.
Innovation will be a G20 key agenda for the first time, thanks to a proposal by China. Innovation, characterized by technology and new products and business models, will create new consumption opportunities and trends.
The people of the world have high expectations for the summit, yet, success depends heavily on all G20 members working together, to implement, not just hash out, policies and measures.
The summit offers a new starting position. However, the journey will be fraught with obstacles. To successfully address low growth, nations must put their faith in cooperation, implementation and, sometimes, painful reforms. Although, perhaps, a bitter pill to swallow, the results will speak for themselves.
