Since that example of crisis-driven coordination, however, nations have pushed their own agendas and, with the economy appearing to heal, deferred more to local politics. Germany championed a global round of deficit-cutting that now seems ill-timed; the United States sniped at China over its currency and other policies; and Brazil sniped at the United States for printing too much money. The issue in Mexico is whether the risks of a new recession have gotten bad enough that global action is possible.
“There is a strong case to be made” for a broad effort by central banks and governments to boost incomes in the short term and try to preempt another downturn, said Edwin Truman, an analyst at the Peterson Institute for International Economics and a former Treasury Department adviser. “We may not be at the point where we declare a global recession, but you are close.”
Individual nations have already taken some action or put ideas on the table. The Obama administration has argued that nations need to pay more attention to growth, both to ease unemployment and as the only sure way to tackle high public and private debt. President Obama has proposed a $500 billion jobs bill. The argument has gained traction with the spread of problems in Europe and the election of socialist President Francois Hollande in France. China and Brazil have both eased monetary policy. European nations are debating how to balance strategies to boost income and jobs with soaring debt.
But that is far short of what was done in 2008 and 2009, when the Federal Reserve began propping up world markets with unlimited dollar loans and supporting U.S. markets with targeted asset purchases, China embarked on a major public infrastructure program that boosted its imports of U.S. and European equipment, and European nations borrowed freely to rescue their banks and fight off recession.
Whether similar measures can congeal over the next week in part depends on the hangover from that round of stimulus. Nations such as Italy, France and Britain, for example, may be near the limit of what they can comfortably borrow; Obama’s jobs bill is stalled in Congress, and other proposals may face the same fate.
Some analysts, moreover, argue that it is time to focus more on long-run policies and accept the fact that growth in the developed world will be slow until debt is cleared away and nations become more competitive.
“If this were just a problem of confidence, you could step in and create demand in the short term,” said Hans Timmer, a top World Bank economist and author of a recent bank review of global economic conditions. “This is a situation where many economies created lots of problems in the boom period that have to be solved. . . . Just by stimulating the economy you are not solving the problem.”
The slowdown in China, he argued, is to be expected after the boom years early in the 2000s and the fast recovery from the 2008 crisis. Officials in Beijing should not be encouraged to do any more than they’ve already done to ease bank lending, he said.
“There is no reason for China to suddenly go out with more stimulus,” he said.
The final outcome in Mexico could turn on a variety of issues. Greece, for example, on Sunday will hold elections that could prove either reassuring — if a centrist coalition returns to power — or destabilizing, if a leftist coalition wins and scraps an international bailout.
The G-20 meets the day after the vote. The U.S. Federal Reserve board meets that week, as well, and some analysts argue that if stimulus is going to come, it will be up to the central banks — not indebted governments — to deliver it.