G20 Still Challenged By Global Imbalances...

G20 Still Challenged By Global Imbalances, Courtesy Of Europe

The world economy finally seems to be confidently out of a hole, but the growth engines pushing it forward look a lot like the ones that helped bring about the recent global financial crisis.

Since the recession, world leaders have stepped up efforts to make the global economy less dependent on debt-financed spending by U.S. consumers of Asian — mainly Chinese — goods, which many economists say played a key role in bringing about the worst economic shock in decades. Put simply, they have been trying to get consumers to spend less in the U.S. and more in China.

China’s weekend pledge to make its exchange rate more flexible shows that pressure from the U.S. and other Group of 20 major economies may be paying off. But any rise in value of the yuan, which makes Chinese exports more expensive for Americans and the rest of the world, is expected to be slow.

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source: wsj