G20 leaders Sunday were singing a new tune — “growth friendly fiscal consolidation” — which in a few short weeks of behind the scenes haggling has become the slogan of the day.
The term first seems to have emerged earlier this year in Washington, as governments undertook a delicate diplomatic dance to unite opposing views on how to shore up global economic recovery.
In April the International Monetary Fund (IMF) published its forecasts for world growth, and warned major economies were shouldering unprecedented levels of public debt which could derail the world economy.
“The challenge is to devise, like in many other advanced economies, a medium-term fiscal plan that anchors expectations and targets measures that are growth friendly,” said IMF economist Joerg Decressin.
The term then popped up again in a comment by US Treasury Secretary Timothy Geithner on June 2.
“As the IMF says, we want those fiscal reforms to happen in a way that’s growth friendly,” he said, as he headed to G20 finance ministers talks in South Korea.
Putting together the two words has two benefits: it sounds reassuring at a key moment when European debt levels are stirring fears, and it stresses the need for growth as the US puts the accent on stimulus rather than austerity.
The IMF took up the theme again the day after.