Key implications of G20 Leaders' Communique; sustainability remains in focus 

The joint statement by the Leaders of the G20, held at Hangzhou, China during Sep 4-5 2016, reinforces their commitment to achieving sustainable economic growth, confirming the pivot toward coordinated monetary and fiscal policy. Leaders met at a time when the global economic recovery is progressing, resilience is improved in some economies and new sources for growth are emerging.

However, growth is still weaker than desirable. Downside risks remain due to potential volatility in the financial markets, fluctuations of commodity prices, sluggish trade and investment, and slow productivity and employment growth in some countries. Challenges originating from geopolitical developments, increased refugee flows as well as terrorism and conflicts also complicate the global economic outlook.

As is typical at these summits, the Leaders of the G20 committed to implement social and structural reforms intended to improve the supply side of economies of the member nations. These include policies that promote innovation, increase productivity, reduce pollution, and other policies that are aimed at improving people's lives.

Additionally, the statement reinforced the commitment of member nations to build an open world economy, promoting global trade and investment instead of embracing protectionism. Moreover, they agreed to refrain from competitive devaluations and avoid targeting exchange rates for competitive purposes.

The outcome of this weekend's G20 summit reinforces the view that global policymakers have begun to pivot away from monetary policy as the sole tool that is supporting the economic recovery after the Great Recession. Calls for additional policy stimulus by major international organizations such as the IMF and the OECD earlier this year appear to have finally been heeded by the leaders of the world's most economically important nations.

Meanwhile, the prospect of more fiscal stimulus bodes well for stronger global infrastructure investment going forward, and will be a key theme supporting our global outlook over the next few years, TD Economics reported.