G20 Economic Outlook
G20 is an intergovernmental forum comprising 19 countries. G20 last met in April, the IMF had just cut it’s global growth forecast to 3.6 % for the year and we warned this could get worse given potential downside risk. Since then, several risks have materialized along with crisis. Human tragedy of war of Ukraine has worsened. So too it’s economic impact through commodity price shocks slowing growth. Inflation is higher now and economic growth has also hampered after pandemic.
We badly need a decisive action taken by G20 . Let me highlight three:
1) Countries must do everything in their power to bring down high inflation:
Persistently high inflation could sink the recovery and farther damage living standards. This has triggered a monetary tightening cycle that is increasingly synchronized. Acting now will hurt less than acting later. Equally important is the clear communication of policy actions.
2) Secondly fiscal policy must help and not hinder central bank efforts to bring down inflation:
Countries facing elevated debt levels will also need to tighten their fiscal policy. This will help reduce the burden of increasingly expensive borrowing. New measures must be budget neutral funded through new revenue or expenditure. Reducing debt is an urgent necessity especially in developing economies.
3) Third, we need to fresh impetus for global cooperation led by G20:
To avoid potential crisis and boost growth and productivity, more co-ordinated international actions are urgently needed. The key is to build on recent progress in areas ranging from taxation and trade to pandemic preparedness and climatic change. G20’s new $1.1 billion fund for pandemic prevention shows what is possible. To avoid farther hunger, malnutrition and migration, the world ‘s wealthier countries should provide
urgent support for those in need.
As G20 meets to navigate the current sea of problems, we me must deal as a family.
- Abhishek Deshpande
Kaveri College, Pune