Washington: Concerns of surge in capital flows, rising commodity prices and fears of overheating of emerging economies, a group of developing countries including India on Friday called for concerted global action to deal with the problems.
“The reliance by advanced economies on overly expansionary monetary policy ...have contributed to a surge in capital flows, increased risks to financial stability, promoted speculative movements in commodity prices, and led to overheating and exchange rate pressures in many emerging markets,” said the communique issued after the G-24 meeting.
The leaders called for increasing infrastructure investment in developing countries, which they felt could negate the impact of surge in capital flows.
Noting that the expansionary policies of advanced economies have had spillover effects on developing countries, the group of 24 developing nations, expressed concern over sharp spike in prices, especially of food and fuel.
“A major challenge is how to ensure that growth in the future is inclusive and employment-intensive. A push to raise investment, including for infrastructure improvement, can help sustain and broaden growth poles in the developing world...,” South Africa’s national treasury director-general Lesetja Kganyago told reporters after releasing the communique.
India was represented at the G-24 meeting by economic affairs secretary R. Gopalan.
The G-24 communique also called for “urgent and concerted actions to deal with the immediate consequences of food and energy price increases and to address the long-standing impediments to food and energy security.”
“...a major push to raise investment in developing countries can help sustain and broaden growth poles in the developing world with important positive spillovers for other developing countries and the global economy. Of critical importance is the need to upgrade infrastructure...,” the communique said.
The G-24 ministers underscored the need for global macro economic policy coordination and cooperative action and agreed that the International Monetary Fund (IMF) has a role to play in this regard.
G-24 is a grouping of 24 developing nations from three regions -- Africa, Latin America and the Caribbean besides Asia.
Besides, at Thursday’s meeting of Brics (Brazil, Russia, India, China and South Africa) grouping, leaders cautioned that volatile commodity prices and excessive capital inflows into developing countries pose threat to world economic recovery.
Early this week, the International Monetary Fund IMF too had warned that rising food and commodity prices pose a threat to poor households, adding to social and economic tensions, notably in the Middle East and North Africa.