World leaders walk economic tightrope
TORONTO (AP) - Wary of slamming on the stimulus brakes too quickly but shaken by the European debt crisis, world leaders pledged Sunday to slash government deficits in the most industrialized nations in half by 2013, with wiggle room to meet the goal.
They generally sided with cutting spending and raising taxes, despite warnings from President Barack Obama that too much austerity too quickly could choke off the global recovery.
"Serious challenges remain," they cautioned in a closing statement. "While growth is returning, the recovery is uneven and fragile, unemployment in many countries remains at unacceptable levels, and the social impact of the crisis is still widely felt," according to the document from the Group of 20 major industrial and developing nations.
Summit participants navigated a careful course between Obama, with his emphasis on growth, and fellow leaders such as German Chancellor Angela Merkel who advocated spending cuts and even tax increases.
"Advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016," according to the statement. The gross domestic product (GDP) measures the value of all goods and services, and is considered the best gauge of economic health.