Good advice: Managing Director of the World Bank Ngozi Okonjo-Iweala (left) listens to Il SaKong, chairman of the World Bank conference during an opening press conference at the G-20 Finance and Central Bank Governors Meeting in Busan, South Korea, Friday. AP/Andy Wong
The Group of 20 leading economies should look to supporting growth in the developing world to help ensure a sustainable long-term global recovery, World Bank officials said Friday.
The call was made at a conference on the sidelines of a gathering of top finance ministers from advanced and developing economies, who are meeting in Busan to set priorities for a G-20 summit in Toronto later this month.
With European growth stymied by a sovereign debt crisis and growth in the U.S. still relatively weak, "it is our strong belief that for sustainable growth the G-20 has to make progress in closing the development gap," said Il SaKong, chairman of the World Bank conference.
"Addressing development needs is the most effective way for the G-20 to contribute to achieving sustainable growth," said SaKong, a former South Korean finance minister.
"In troubled times like today ... the world finds it much more difficult to grow without a strong push from the developing world," he said.
South Korea assumed the rotating G-20 chair this year and will convene a summit in November in its capital, Seoul.
World Bank experts said big economies should channel investment into filling the gaping need for better infrastructure, while also ensuring they rebalance growth to help make capital more affordable for crucial productive uses.
The G-20 finance officials face pressure to shape a consensus on how to reshape the global financial system, while also working to fend off disruptions like the European debt crisis, which has triggered slides in global financial markets and the euro.
Managing that fiasco has recently overshadowed longer term efforts to reform banking regulation and set up financial safety nets for countries emerging from crisis.
"This crisis presents a new threat to the global economy. Just when we thought we have turned the corner, there are new clouds on the horizon," said Ngozi N. Okonjo-Iweala, a World Bank managing director.
Reinforcing fears that consumers are fretting about the debt crisis afflicting the region, retail sales in the 16 countries that use the euro fell by 1.2 percent in April from March, the EU's statistics office said Thursday.
The G-20, founded in 1999, evolved into a crisis management forum with the 2008 collapse of U.S. investment bank Lehman Brothers and the resulting turmoil in financial markets.
It now needs to set an agenda that will promote sustainable long-term global growth, said World Bank chief economist Jong-Wha Lee.
Plans for a meeting Friday of top financial officials of China, Brazil, Russia and India reflect the rising profile of emerging and developing economies in the forum, and their desire for a greater say in how the world economy is managed.
The G-20 "should really be the G-172," said Okonjo-Iweala, referring to United Nation member nations.
She urged that the gathering Friday also push to ensure that funds from corruption, a major loss of resources for the developing world, be recovered.
Later Friday, finance ministers will discuss a draft communique, a final version of which is to be issued Saturday at the conclusion of the G-20 meeting.
The officials, who last met in Washington in April, are looking to shore up confidence in financial markets and in a nearly $1 trillion bailout plan for ailing European economies, hoping to stave off any wider damage to the world economic recovery.
But agreement is far from certain on proposals for a bank tax, for setting new standards on how much capital banks need to protect against a future financial crisis and erecting "financial safety nets" to help emerging economies vulnerable to financial flows.
The U.S. and Europe favor a bank tax to pay for future bailouts, but others such as Canada and Australia oppose it given that their banks weathered the global crisis intact.
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