Indonesian Finance Minister Sri Mulyani (C-Front) attends the G20 finance ministers meeting in Nusa Dua on the Indonesian resort island of Bali, July 16, 2022.
SONNY TUMBELAKA | SWIMMING POOL | AFP via Getty Images
World leaders open a meeting on the resort island of Bali, Indonesia on Tuesday as the global economy grapples with a looming recession, massive central bank interest rate hikes and historically high inflation.
The annual gathering of leaders from the world’s major economies, known as the Group of 20 nations, is also taking place as Russia’s war in Ukraine drags on and relations between Washington and Beijing remain strained.
The meeting of officials representing more than 80% of global GDP and 75% of world exports is the 17th meeting since the platform’s launch in the wake of the Asian financial crisis in 1999 as a gathering for finance ministry officials and central bank governors.
Who’s in?
Nineteen countries and one economic region, the European Union, will attend this year’s two-day G-20 meeting.
This year’s personal roster took the spotlight as Russian President Vladimir Putin continues his unprovoked war in Ukraine.
Putin will not attend the summit and will instead be represented by Foreign Minister Sergei Lavrov, who walked out of a G-20 foreign ministers meeting in July as his global counterparts called for an end to the war in Ukraine. Portal reported that Putin could join virtually.
US President Joe Biden is also scheduled to hold a bilateral meeting with his Chinese counterpart Xi Jinping ahead of the G-20.
Other participants include newly appointed British Prime Minister Rishi Sunak and Saudi Arabia’s Crown Prince and de facto leader Mohammed bin Salman, who recently spearheaded an OPEC+ initiative to cut oil production by 2 million barrels a day to prop up prices.
Expectations are “not very high”
According to Andrew Staples, Asia-Pacific director of Economist Impact, the Economist Group’s policy and insights arm, not much progress is expected from Biden and Xi’s meetings.
“Expectations are not very high,” he told CNBC’s Martin Soong, adding that ongoing geopolitical tensions are dragging global growth. He highlighted China’s stance on the war in Ukraine as one of many signs of the erosion of US-China relations.
“The global business community is very concerned that these geopolitical tensions are having a negative impact…we have in Ukraine what unfortunately China has been somewhat ambivalent about President Putin is really hurting the global economy,” he said.
“Finding a bottom for this relationship — which is what Biden is aiming for — will be positive not only for the business community but also for global economic sentiment,” he said.
The role of Russia
Russia’s latest move to steadily change its stance on the United Nations-led Black Sea Grains Initiative will “probably overshadow any other negotiations in Bali,” said Laura von Daniels, head of Americas research at the German Institute for International Politics and Security in a report by the Council on Foreign Relations.
The deal, struck earlier this year, aimed to ease Russia’s naval blockade and reopen key Ukrainian ports to deliver crops via a Black Sea humanitarian corridor. It expires on November 19th.
“Approval would not cost Russia anything,” said von Daniels. “However, it would allow both Xi and Putin – as leaders of authoritarian states – to be applauded on the world stage for ensuring food security.”
reopening strategy
The gathering comes as a vast majority of the world is reopening borders and lifting Covid-related restrictions – with the slogan “Recovering Together, Recovering Stronger”.
Members agreed that “policy stimulus needs to be appropriately scaled back during the recovery,” Indonesia’s G-20 presidency said in a note released ahead of the meeting in July. She referred to a survey she had conducted among Member States.
The potential for longer-lasting effects of the coronavirus pandemic on global growth will be a key theme of the November meetings.
“Risks arising from supply disruptions, rising inflation and weak investment are the top three risks that urgently need to be addressed in terms of scarring from the pandemic,” it said, emphasizing the need for global cooperation, including gradual reopening of borders to support the revival of act.
“We all have some kind of inflation problem and also rising interest rates, so the whole world has an interest in making progress here,” Australian Treasurer Jim Chalmers told CNBC’s Martin Soong. “Conditions are highly risky and volatile,” he said.
