G20 teeters on the brink of the fiscal cliff

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G20 teeters on the brink of the fiscal cliff

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Delegates are gathering for the G20 meeting in Mexico City. Insiders say that the so-called US fiscal cliff is outweighing Europe’s debt crisis in terms of short-term risks to the global economic output.

Unless the US Congress can reach a deal, 600 billion dollars in cuts and taxes will kick in in January, and could push the US back into recession.

India’s Finance Minister Shri P. Chidambaram wants swift action:

“The U.S. has to find answers to its fiscal cliff. Whoever is elected president on Tuesday would have to work with the U.S. congress and find answers. Europe would have to get its house in order. I don´t think Europe has seen the worst yet. I hope that they find answers and put Europe back on the growth path.”

A draft communique suggests there are elevated risks facing the global economy, including the crisis in Europe and potential problems in Japan. Few expect major agreements with several political heavyweights skipping the meeting.