G20 leaders to seek solutions to economic downturn

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LONDON, March 30 (Xinhua): Amid a deepening financial and economic crisis, leaders from the Group of 20 (G20) developed and emerging economies are due to meet here Thursday for global solutions.
Expectations are high that they would be committed to a coordinated response to the crises, an overhaul of the global financial architecture and restraint from protectionism.
Nearly five months after the G20 leaders held their first summit in Washington, there is still no sign the financial crisis is fading away, while the world economy has been plunged into a recession due to its impacts.
The International Monetary Fund (IMF) recently painted a grim picture for the world economy this year. It forecast earlier this month that the world economy is set to shrink by 0.5 per cent to 1 per cent, the first-ever contraction in 60 years.
Billionaire investor George Soros warned Saturday that the upcoming G20 summit in London will be a crossroad for the world economy.
"The G20 meeting is make or break because unless they do something for developing world there will be serious collapse in that part of the world," he said in an interview with British Broadcasting Corporation.
British Prime Minister Gordon Brown put the economic crisis high on the G20 summit agenda, aiming to build a global consensus on the economy.
But a transatlantic rift over the necessity of further fiscal stimulus appears to complicate efforts of the summit.
In response to US pressure on the European Union (EU) countries to boost their fiscal stimulus, Czech Prime Minister Mirek Topolanek, whose country holds the current EU presidency, slammed US plans to spend its way out of recession as "a road to hell."
Topolanek's blunt criticism exposed European differences with Washington and signaled a hard job for Brown to achieve greater international cooperation.
Playing down the transatlantic rift, British Foreign Secretary David Miliband said on Sunday Britain and the United States will not push G20 leaders to announce specific spending pledges.
In a preparatory meeting two weeks ago, G20 finance ministers and central bankers agreed to "take whatever action is necessary" to support the economy. They pledged to continue coordinated and comprehensive action to boost demand and jobs, adding the key priority now is to restore lending by tackling toxic assets in the financial system.
Concerns have been voiced over the so-called "Buy American" clauses in the newly- adopted US economic stimulus package, which barred the use of foreign iron, steel and manufactured goods in public works projects funded by the plan.
Alarm bells have also rung in Europe after French President Nicolas Sarkozy said French car makers which received government help should keep domestic jobs first.
When rich countries spent massively to bail out financial institutions, they are required to put priority on domestic lending to help save the economy. This kind of financial protectionism has caused flight of capital from developing and emerging markets.
The World Trade Organisation (WTO) warned Thursday that a gradual build-up of protectionist measures threatens to strangle international trade and hamper global recovery.
"There is no indication of an imminent descent into high intensity protectionism, involving widespread resort to trade restriction and retaliation," the WTO said in a report.
"The danger today is of an incremental build-up of restrictions that could slowly strangle international trade and undercut the effectiveness of policies to boost aggregate demand and restore sustained growth globally," it said.
WTO Director General Pascal Lamy urged the G20 leaders to make a strong commitment to avoiding trade restricting or distorting measures and working for a rapid conclusion of the long-stalled Doha round of global trade talks.
The WTO estimated that tariff and subsidy cuts for trade in goods already on the table in the Doha global trade talks were equivalent to a new stimulus package of 150 billion euros (about 195 billion US dollars).