The 17th annual summit of the Group of Twenty (G-20) was hosted in Bali by Indonesia under the theme ‘Recover Together, Recover Stronger’. A change of presidency occurred at the end of this summit, as India took over the G20 presidency. As a result, the following, 18th summit will be hosted by India in 2023.
Key Outcomes from the Summit
Several major decisions were made by member countries during the 17th annual G-20 summit.
Response to Russian Aggression
One notable outcome was a declaration condemning Russia’s aggression in Ukraine “in the strongest terms” demanding its unconditional withdrawal. Additionally, while most members condemned the war, it was recognized that views varied, with some having different assessments of the situation and sanctions.
Global Economy Shifts
The G20 economies also agreed to carefully pace interest rate increases to avoid damaging spillovers, representing a significant change from the previous year’s focus on healing the economic wounds inflicted by Covid-19. They warned of “increased volatility” in currency movements.
Addressing Food Security
Another important resolution was a commitment to coordinated action on food security challenges. The leaders expressed support for the Black Sea grains initiative as a means to address these issues.
Tackling Climate Change
The G20 leaders reaffirmed their commitment to limit global temperature rise to 1.5 degrees Celsius as per the goal of the 2015 Paris Agreement on climate change.
Embracing Digital Transformation
Digital transformation was identified as crucial for achieving sustainable development goals. International collaboration for digital skills and literacy development was encouraged, especially benefitting women, girls, and individuals in vulnerable circumstances.
Focus on Global Health
The leaders signaled their dedication to a healthy and sustainable recovery, working towards universal health coverage. The establishment of a new financial intermediary fund for pandemic prevention, preparedness, and response (the ‘Pandemic Fund’) hosted by the World Bank was welcomed.
Challenges Faced by G-20 Member Countries
Despite positive outcomes, several challenges were identified that G-20 member nations must address.
Impact of Russia’s Invasion of Ukraine
Russia’s invasion of Ukraine has created significant geopolitical uncertainty and accelerated global inflation. Western sanctions related to the conflict have further complicated matters.
The Impact of Inflation
Responding to the high inflation, central banks worldwide raised interest rates, which in turn hamper economic activity. Some major economies are on the verge of recession due to this.
Slowdown of Major Economies
China, a global economic powerhouse, is facing a sharp slowdown due to a real estate crisis.
Rising Geopolitical Tensions
The world economy also grapples with geopolitical tensions, such as those between the two largest economies, the US and China, or reduced trade between the UK and the euro area due to Brexit.
About G20
Established in 1999 in the wake of a financial crisis impacting East Asia and Southeast Asia, the G20 aims to ensure global financial stability by including middle-income countries. The group comprises 60% of the world’s population, 80% of global GDP, and 75% of global trade.
The Path Ahead for G-20 Countries
To ensure a strong, sustainable, balanced, and inclusive recovery, joint action by the G20 is crucial. This joint action requires not just securing peace in Ukraine but also “help prevent further fragmentation”. The G20 leaders need to push for “more open, stable, and transparent rules-based trade” to help address global shortages of goods. Strengthening the resilience of global value chains can provide protection against future shocks.
UPSC Civil Services Examination, Previous Year Question
The question: “In which one of the following groups are all the four countries members of G20?” was asked in the UPSC Civil Services Examination. The options were: (a) Argentina, Mexico, South Africa and Turkey (b) Australia, Canada, Malaysia and New Zealand (c) Brazil, Iran, Saudi Arabia and Vietnam (d) Indonesia, Japan, Singapore and South Korea. The correct answer is (a).