Rebalancing Global Growth: The G20′s Difficult Challenge

As American consumers retired from serving as the engine of world growth, the major surplus economies would have to pick up the slack. This is why global rebalancing was a key item on the G20 agenda in the 2010 Toronto and Seoul Summits. The United States required a plan for fiscal consolidation, and China should implement its domestic rebalancing goals to see a rise in household incomes and domestic consumption as well as exchange rate appreciation. Other East Asian nations would need to reduce their reliance on export-led growth by importing and consuming more while Germany, as the main European surplus economy, should stimulate domestic demand and lead structural reforms in the eurozone.