G20 Summit 2023: Decoding the key economic agendas for the meeting

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The upcoming G20 summit in New Delhi will be unlike any other held in the past. It comes at a time when the world faces significant headwinds – from the COVID-19 pandemic, the Ukraine war, and an economic slowdown in China and Europe.

The world has been in limbo for the last three years. The once-in-a-century Covid-19 pandemic & the Ukraine war have dragged the global economy down.

Inflation is soaring globally. Many countries are either flirting with or are already in recession. The world is looking at the G20 bloc for a solution since it represents around 85 per cent of global GDP and two-thirds of the world’s population.

“Taking up the presidency amidst widespread polarisation and geopolitical rigidities, the G20 summit is an opportunity for India to steer the conversation towards human-centric development that aligns with the priorities of the global South,” says Ashwajit Singh, Managing Director, IPE Global, a global development consultancy.

The G20 summit is likely to focus on three major issues affecting the global economy at the moment:

Supply chain disruptions & trade fragmentations

Ballooning global debt in the global South

Global action to mitigate climate change

Supply chain disruptions & trade fragmentation

China’s draconian COVID-19 lockdowns not only raised inflation and slowed down global growth it also exposed the world’s over-dependence on China as the factory. With the West desperate to ‘de-risk’ from China, the upcoming Summit may deliberate on a new global infrastructure, where multiple countries will hold the key to the international supply chain.

While the world still needs to be fully fragmented into trading blocs, a World Trade Organisation report shows that global trade will grow by just 0.5 per cent if fragmentation takes shape.

The International Monetary Fund estimates global fragmentation reduces global economic output by about $7.4 trillion.

To protect developing countries in Asia, Africa and Latin America from fragmentation, the G20 summit is likely to push for a more open and transparent rules-based trade.

Ballooning global debt in the global South

The Covid-19 pandemic led to an increase in the debt burden worldwide, especially in the developing world. According to an IMF report, global debt reached an alarming $226 trillion by the end of 2021. India, which is pitching itself as the voice of the global South, hopes to create a global framework for reducing the debt burden on developing countries through renegotiating bilateral and multilateral loans.

In a clear indication of India’s concern about the global debt crisis, Indian PM Narendra Modi recently said, “The Global Sovereign Debt Roundtable will strengthen communication among key stakeholders and facilitate effective debt treatment to accelerate global debt restructuring efforts.”

New Delhi is likely to find support from Washington DC, which is pushing for a larger restructuring of multilateral developmental organisations like the IMF and World Bank at the Summit, intending to boost credit lines for infrastructure projects and climate finance.

Global action to mitigate climate change

Climate change is the single biggest challenge the world will face in the future. A recent G20 report shows that the chronic physical risk from climate change is estimated to impact up to 6 per cent of global Gross Domestic Product by 2050, rising to 18 per cent of global GDP by 2100.

The economic impact will be much higher for tropical countries in Africa and Southeast Asia.

Energy transition to low-carbon alternatives – a key part of the net-zero agenda of countries – and financing the climate mitigation goals of the developing world will be high on the agenda, with India likely to play a lead role on behalf of the global South.

“Bringing climate actions from margins to mainstream should be the walk-the-talk agenda. Failure to foster climate action will further ravage the lives and livelihoods of millions. G20 nations must commit to act decisively with shared responsibility and urgency,” Abinash Mohanty, an expert reviewer of the IPCC’s sixth assessment report, tells wionews.com.

But the September 9 and 10 discussions will have their fair share of drama. Two member countries — Russia and China — are at loggerheads with the West. So, coming to a consensus on reshaping the world economy will be a tall order. It will certainly be the test of India’s global leadership ambitions.

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