Thu, November 11, 2010
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G20 in subdued mood

2010-11-11 07:53:02 GMT2010-11-11 15:53:02 (Beijing Time)

Members of the G20 nations prepare to meet in South Korea for the 5th meeting since the global financial crisis as new tensions threaten to prevent agreement.

Even before the G20 meets there is a sense of deflation about the event - this time being held in Seoul.

As world leaders arrived in South Korea, their hopes that this week's gathering would mark the beginning of a new era of global cooperation were fading.

The meeting is the fifth since the financial crisis exploded in 2008 - but any unity forged in the crisis has given way to diverging national policies that reflect a multi-speed recovery from the recession.

According to Ashraf Elgar from London's IG index - there is little hope of any agreement with U.S's second round of quantitative easing and its opposition to China's weak currency.

"I find it very difficult purely because you get obviously the world ministers are really reeling from the QE2 and you've got the U.S. - the main opposition if you like to the weakly yuan in China - so you have a lot of fundamental issues which personally I cannot see them agreeing on something that everyone is happy with by the end of the weekend."

With critics questioning the effectiveness of the G20 grouping itself, President Barack Obama urged all G20 leaders to do their part to stem global imbalances to procure a strong stable recovery.

And he found support from the UK's finance minister, George Osborne who said a strong U.S. economy was important for the whole world.

"It's in everyone's interests that the U.S. economy gets motoring again, that is something that is of enormous importance for Asia, it's of enormous importance to Europe as well. I would say this as well. For all the problems in the U.S., the problems in the U.S. housing market which are well known, don't underestimate one of the most dynamic economies the world has ever seen, and I hope like everyone else that the U.S. economy is going to be back firing on all cylinders because that is in everyone's interests."

As Canadian Prime Minister, Stephen Harper landed in Seoul he may have reflected on Canada's economy becoming the envy of the world this year.

It managed to evade a banking crisis or any other financial meltdown and grew by 6.1 per cent in the first three months of this year.

The U.S. and the UK have expressed interest in copying the Canadian system.

Harper is expected to push for currency flexibility and current account balances at the G20 meeting.

Penny Tweedie, Reuters.

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