(Bloomberg) -- Group of 20 finance chiefs for the first time signaled joint concern on mounting income inequality across the world economy.
“In some countries, potential growth has declined, demand continues to be weak, the outlook for jobs is still bleak and income inequality is rising,” finance ministers and central bankers from the leading industrial and emerging markets said in the draft of a statement to be released after talks in Istanbul on Tuesday.
The G-20 officials have never explicitly mentioned income disparity in a communique since their leaders made the body the main coordination forum of international economic policy in 2009. It reflects growing concern that the gap between rich and poor has widened following
2008’s financial crisis and may threaten economic and political stability.
“We will also strive to ensure that growth is inclusive, including through policies that address income inequality,” the officials added in a another section of the draft.
Federal Reserve Chair Janet Yellen and Bank of England Governor Mark Carney are among those in Istanbul who have said in the past year that inequality may pose an economic risk. Concern was amplified by French economist Thomas Piketty’s bestselling book “Capital in the Twenty-First Century” which argued returns on capital outpaced economic growth over the past 30 to 40 years, leading to greater wealth differences.

Vicious Circle

The Paris-based Organization for Economic Cooperation and Development estimates the gap between rich and poor is at its highest level in most of its countries in three decades. The richest 10 percent of the population in its membership earn 9.5 times more than the poorest 10 percent, up from 7 times in the 1980s.
“An ambitious reform agenda can help boost jobs, productivity and support demand, which is crucial to preventing the development of a vicious circle whereby weak demand and growing inequalities undermine potential growth and confidence, possibly leading to persistent stagnation,” OECD Secretary-General Angel Gurria said yesterday in Istanbul.
Anti-poverty charity Oxfam said last month that the richest 1 percent are about to control a majority of the world’s wealth by 2016.