G20 Summit: What’s at Stake?

What’s in today’s article:

• News Summary

 

Why in news?

• Heads of state and governments belonging to 20 of the world’s major advanced and emerging economies have gathered for a two-day summit meeting in Bali, Indonesia.
  • The 17^th annual summit of G20 countries is being organized at Bali, Indonesia.
• At the end of the meeting, India, represented by PM Narendra Modi, will assume charge of the G20 presidency.
  • The 18th summit will be held in India next year.

 

News Summary: Agenda for the 2022 summit

• The Bali summit will have three key priorities:
  • Global Health Architecture:
    • This involves deliberations towards strengthening global health resilience and making the global health system more inclusive, equitable, and responsive to crises.
  • Digital Transformation:
    • Deliberations here have centred on achieving the full potential of rapid digitalisation of the global economy by creating a new landscape of cooperation among nations.
  • Sustainable Energy Transition:
    • The discussions have focussed on ways to accelerate the transition towards cleaner energy sources.
    • In particular, since any such transition requires substantial investments, the efforts have been focussed on finding a platform for such investments.

 

What else is at stake?

• The G20 countries are considered as the engines of global growth as they account for 60 per cent of the world’s population, 80 per cent of the world’s GDP and 75 per cent of the world’s exports.
• However, since the October 2021 summit in Rome, prospects of the global economy have worsened.
• A recent report of the International Monetary Fund on G20 countries shows, most of the G20 constituent countries have suffered significant output losses since the start of the Covid-19 pandemic.
  • India, for instance, would have lost almost 14 per cent of its total output — the highest loss among all G20 countries.

Summit taking place amidst challenging global outlook

• Russia’s invasion of Ukraine has not only created massive geopolitical uncertainty but also spiked global inflation.
  • Persistently high inflation — at historic highs in several countries — has eroded purchasing power across these countries, thus dragging down economic growth.
• In response to high inflation, central banks across countries have raised interest rates, which, in turn, have dampened economic activity further.
  • Some of the biggest major economies such as the US and the UK are set to face a recession.
• China, one of the major engines for global growth, is witnessing a sharp slowdown as it struggles with a real estate crisis.
• Also, the world economy is struggling with geopolitical rifts such as:
  • tensions between the US and China, the two biggest economies in the world; or
  • the decline in trade between the UK and the euro area in the wake of the Brexit decision.

 

Way forward

• For global prospects to improve, two things are necessary - one, the G20 countries can grow faster if they grow together; two, such growth, in turn, requires peace.
• Hence, the first job at hand is to contain raging inflation. But at the same time, governments have to find ways to help the vulnerable without necessarily ballooning the debt levels.
• Also, a strong, sustainable, balanced, and inclusive recovery requires joint action by the G-20 which secures peace in Ukraine.
• On trade, the G20 leaders need to push for a “more open, stable, and transparent rules-based trade” that would help address global shortages of goods.
  • Strengthening the resilience of global value chains would help protect against future shocks.