G20 vow to promote growth but rifts remain

They also warned of the risk of "persistent stagnation" in some leading economies due to "prolonged low inflation alongside sluggish growth."

Istanbul: The world's top 20 economies on Tuesday agreed to take steps to promote global growth but struggled to overcome rifts over the the most suitable tools to use and how best to overcome the Greek debt crisis.

G20 finance ministers and central bank chiefs meeting in Istanbul said that growth in the global economy remains "uneven" and the recovery "slow", especially in the eurozone and Japan as well as some emerging market economies.

They also warned of the risk of "persistent stagnation" in some leading economies due to "prolonged low inflation alongside sluggish growth."

"We are determined to overcome these challenges" to deliver sustainable growth that can create jobs and encourage inclusiveness, a key target of the Turkish G20 presidency, they vowed in their draft communique.

The G20 states said the recent sharp decline in oil prices will provide "some boost" to global growth and should allow states to "reassess" fiscal policies to sustain economic activity.

It said that fiscal policy "has an essential role" in building confidence and sustaining domestic demand, in a prod to some states to drop their insistence on austerity.
However there were indications of tensions that some states -- notably fiscal hawk Germany -- were unwilling to relax fiscal policy enough to boost demand.

A senior US treasury official, who asked not to be named, said Washington wanted to see countries use all the tools at their disposal -- including fiscal policy -- to boost growth.

The official said that the current strong performance of the US economy was positive and it would be good to see similar growth levels in other areas like the eurozone and Japan.

The G20 communique said that while the sharp oil price falls will provide some boost to global growth, the implications will be different for oil exporting and oil importing countries.