New Experiment in Global Macroeconomic Coordination

PITTSBURGH (Dow Jones)--The Group of 20 developed and developing nations has embarked on a new experiment in global macroeconomic coordination but all the tough work still lies ahead, Australian Prime Minister Kevin Rudd said Friday. The summit represents "another important chapter in the response to the global recession...but it would be an absolute mistake to believe that our work finishes here," Rudd said. "In fact our work just begins here." Rudd said he believed the commitments made at the G-20 could pave the way for a sustained global recovery but said the journey there "will be tough, it will be bumpy, it will be long." Rudd said the G20's commitment to a framework for balanced and sustained growth would present challenges for Chinese and Japanese policy makers in particular. China and Japan have long generated large trade and current account surpluses, in part by purchasing dollars to keep their currencies weaker. Rudd said the Asian nations would need to look at "new possibilities" for generating growth in future - relying less on the debt-burdened U.S. consumer. He said that, so far, the G-20 had not explicitly discussed foreign exchange matters but hinted that may need to happen as the G-20 works to contain global imbalances. "It means that you have to resort to other strategies (for growth) including increasing your own domestic consumption," he said. Rudd welcomed the establishment of the G-20 as a "permanent part of the global governance system for the future" and said it represents a big gain for Australia. "It's important for Australia that our voice is heard in the councils of the world," he said. "This is the first time that our country has had a place at the top economic table." Rudd said the establishment of a peer review system for G20 countries to monitor each others' policies will produce real results. But he warned the containment of large imbalances won't happen quickly. "This will not occur overnight," he said. He also noted that peer review - and the possibility of criticism of some countries' economic policies - would be a "new experience" for China. Rudd said that despite some progress in Pittsburgh, achieving a climate deal at December's Copenhagen summit will be "very hard to do." He also said that completing the Doha trade round over the next year will be "critical" for restoring strong growth.