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17.11.2008 International

Leaders Welcome G20 Action Plan

By Daily Guide

World leaders have welcomed the outcome of the G20 summit that calls for further steps to shore up a global economy on the brink of recession.

The meeting called for a "broad policy response", emphasising the role fiscal policy, such as tax cuts, must play in reviving economic growth.

Leaders said they would make progress before a second summit in April.

However, for all the talk of action and change, some analysts and campaigners said the outcome was disappointing.

The meeting brought together leading industrial powers, such as the US, Japan and Germany, and also emerging market countries such as China, India, Argentina, Brazil and others - representing 85% of the world economy.

China said on Sunday that the meeting, which was attended by President Hu Jintao, was "conducive to the growth of the world economy" and would help reform international financial institutions.

"China hopes that all countries could continue to enhance co-ordination, seek consensus, substantially strengthen the financial regulation and take actions to prevent global economic recession," said foreign ministry spokesman Qin Gang.

Beijing's view had earlier been echoed by the other leaders attending the event.

US President George W Bush said that leaders had agreed to reform global economic structures, but rejected protectionism.

British Prime Minister Gordon Brown said the meeting reached important conclusions about trade, financial stability and economic expansion and Germany's chancellor, Angela Merkel, said she was extraordinarily satisfied with the outcome.

'Plain vanilla'

However, analysts said the meeting was long on promises and short on action.

"This is plain-vanilla stuff they could have agreed on without holding a meeting," Simon Johnson, an economist at the Massachusetts Institute of Technology and a former chief economist of the International Monetary Fund told the New York Times.

"What's new, except that this is the G20 instead of the G7?"

Carl Weinberg, chief economist at High Frequency Economics, said that markets could be vulnerable after the weekend meeting because there was no clear pledge for co-ordinated tax and interest rate cuts.