Context
- Heads of state and governments from 20 of the world’s major advanced and emerging economies have gathered in Bali, Indonesia, for a two-day summit meeting.
- The G20 countries’ 17th annual summit is being held in Bali, Indonesia.
- At the conclusion of the meeting, India, represented by Prime Minister Narendra Modi, will take over the G20 presidency.
- Next year’s summit will be held in India.
Relevance
GS Paper 2: Important International institutions, agencies and fora, their structure, mandate.
Mains Question
Do you believe that the recent G20 summits have devolved into talking shops rather than getting down to business? Analyze critically. (250 words)
The Bali summit will focus on three key issues:
- Global Health Architecture: This entails discussions aimed at increasing global health resilience and making the global health system more inclusive, equitable, and crisis-responsive.
- Digital Transformation: Discussions here have focused on realising the full potential of the global economy’s rapid digitalisation by forging a new landscape of international cooperation.
- Sustainable Energy Transition: Discussions have centred on how to speed up the transition to cleaner energy sources.
- Because any such transition requires significant investments, efforts have been concentrated on identifying a platform for such investments.
What else is on the line?
- The G20 countries are regarded as the engines of global growth because they account for 60% of the world’s population, 80% of global GDP, and 75% of global exports.
- However, the global economy’s prospects have deteriorated since the October 2021 summit in Rome.
- According to a recent International Monetary Fund report on G20 countries, the majority of G20 constituent countries have suffered significant output losses since the start of the Covid-19 pandemic.
- India, for example, would have lost nearly 14% of its total output, the highest loss among all G20 countries.
The summit is taking place in the midst of a challenging global outlook.
- Russia’s invasion of Ukraine has not only caused massive geopolitical uncertainty, but it has also caused global inflation to skyrocket.
- Inflation has been persistently high, reaching historic highs in several countries, eroding purchasing power and dragging down economic growth.
- In response to high inflation, central banks around the world raised interest rates, dampening economic activity even further.
- Some of the world’s largest economies, including the United States and the United Kingdom, are on the verge of a recession.
- China, one of the world’s major growth engines, is experiencing a sharp slowdown as it deals with a real estate crisis.
- Furthermore, the global economy is grappling with geopolitical schisms such as tensions between the world’s two largest economies, the United States and China, or the decline in trade between the United Kingdom and the eurozone in the aftermath of the Brexit decision.
The way forward
- Two things are required for global prospects to improve: first, the G20 countries can grow faster if they grow together, and second, such growth necessitates peace.
- As a result, the first task at hand is to reign in raging inflation. At the same time, governments must find ways to assist the vulnerable without increasing debt levels.
- A strong, sustainable, balanced, and inclusive recovery also necessitates joint action by the G-20 to ensure peace in Ukraine.
- On trade, the G20 leaders must advocate for “more open, stable, and transparent rules-based trade” to help address global goods shortages.
- Improving the resilience of global value chains would protect against future shocks.
