Saul Eslake, chief economist (Australia) of Bank of America — Merrill Lynch, believes the G20 Summit, which is set to be held in Brisbane in November, could be remembered for making a significant global contribution — provided the topic of productivity gains is given proper consideration by the G20 leaders. Eslake made the comment at the close of his presentation at a G20 Business Forum — the first in a series of three being hosted by Griffith Business School and Minter Ellison.
The forums are designed to foster greater knowledge in the build-up to the G20 Leaders Summit.
Eslake’s presentation focused on the challenges facing economic growth. He began with the two per cent target for economic growth secured by federal treasurer Joe Hockey at the meeting of G20 finance ministers and central bankers in February. Since the ‘trough of 2009’, the initial growth instigated by the G20 to the global economic climate has slowed, and official forecasts about long-term growth in both advanced and emerging economies are now less optimistic.
According to Eslake, the proposed two per cent growth figure now only goes half way to what is required. With recovery rates in the US at their weakest since World War Two, there are ‘sobering prospects for economic growth’. He said: ‘The growth rates of the world’s major economies during the next 20 years will be slower that what we’ve become accustomed to.’
Eslake believes Australia has paid a high price, in terms of productivity, for the emphasis placed on security of water, energy and food. Structural change is needed to boost productivity, but in order to do that we need ‘to avoid the temptation’ to rescue failing firms and support declining industries. He said: ‘If these kinds of thoughts are in the minds of G20 participants, then I’d like to think people will look back on the Brisbane summit favourably.’
The second in the G20 Business Forum series will take place on 18 September 2014 at the offices of Minter Ellison in Brisbane’s CBD.