World finance leaders this week will make their most concerted effort to redefine the world economic order in the era following Donald Trump and the coronavirus pandemic.
With trade tensions no longer shaking the Group of 20 economies in the way they did during the term of the former U.S. president, the first in-person meeting of its finance ministers since the disease struck last year it will try to forge a consensus on unfinished business ranging from climate change to corporate taxation.
Alongside these issues, the July 9-10 meeting is likely to take stock of an incomplete global recovery, hampered by the persistent threat of setbacks from new variants of the coronavirus. This may focus minds on the need for continued fiscal efforts to support growth, amid growing concerns about inflation and oil prices that remain high following this week’s split in OPEC + discussions.
“The world economies are working together again,” said Rosamaria Bitetti, an economist at Luiss University in Rome. “This is a great opportunity for the G-20 to think about how this pandemic has shown that in our interconnected world, issues are global and need to be addressed together, leaving nationalism behind.”
With Italy hosting the meeting in Venice as chairman of the group, the symbolism of convening in a former hub for cross-continent trade will not be lost on participants. They might even look to the name of the city’s damned fire opera – The Phoenix, or Phoenix – for inspiration on what to fight for in the wake of an unprecedented global crisis.
The risk is that the scars of discord that have held international meetings over the Trump years may persist, including echoes of his frequent suspicion of China.
For Bruno Le Maire, the French finance minister, the responsibility is now on the group to build on the consensus reached during the early stages of the pandemic.
“The G-20 must demonstrate in Venice that it can always meet its responsibilities and be able to provide concrete, new and radical answers to the challenges to come in a continuation of what it has managed to do since February 2020,” he said. to reporters Tuesday.
Here’s a closer look at some of the areas for discussion:
Finance officials are likely to discuss ongoing efforts to combat the economic impact of the pandemic, a dialogue that can embrace both the need for continued government support and the inflation prospects that lie ahead.
U.S. Treasury officials, informing reporters Tuesday, said Secretary Janet Yellen will urge other countries not to prematurely withdraw fiscal measures related to COVID. It will also encourage longer-term thinking to foster economic growth, pointing to President Joe Biden’s proposals to spend on infrastructure, support the workforce and green investments.
Such an emphasis also indicates that, at least for U.S. officials, keeping the economic recovery on track brings ever more urgency than inflation fears. The same is true for Europe, with countries pushing for too many generous incentives and for the European Central Bank to minimize price fears.
Countries will also discuss ways to avoid excessive divergence among economies as concerns grow over the impact of new virus strains on recovery.
Even right in Europe, the boom is “highly irregular,” according to the European Commission, which this week predicted that Germany and the Netherlands would reach production levels before the crisis a full year ahead of Italy and the UK. Spain. This phenomenon is happening across the globe, leading to growing disparities between countries and regions.
“The world is facing a two-way recovery,” IMF Managing Director Kristalina Georgieva said in a blog post on Wednesday. “It is a critical moment that requires urgent action by the G-20.”
The G-20 has long struggled to agree on how to fight climate change, and this meeting, in a city more vulnerable than most to rising sea levels, will continue. even more debate.
In a speech at a separate climate change conference on Sunday, Yellen could reiterate the U.S. vision that private finance management will be crucial to tackling the problem.
Under Biden, the United States is joining Europe’s efforts to prepare a system to force companies to disclose more information about how climate change threatens their operations. Climate-related financial disclosure may be an issue discussed both at the G-20 and at the next conference.
Ministers are set to approve a global agreement between 131 countries brokered by the Organization for Economic Co-operation and Development that proposes a minimum corporate tax of at least 15%, and new rules to divide tax revenues by more. big world companies.
While discussions are scheduled to continue until October when G-20 leaders meet in Rome, a preliminary year in Venice would mark another important step toward reforming the global fiscal landscape.
Negotiations could still clash over disagreements over how much tax revenue should be redistributed to developing economies, and whether countries would respond to the US demand to withdraw digital levies once the new global rules are in place. in force.
Special drawing rights, called SDRs, will also be among topics that the International Monetary Fund is preparing the largest resource injection in its history to help increase global liquidity and help emerging and low-income nations deal with rising debt. .
France is pushing rich countries to lend back their new SDRs so that Africa will eventually receive a total of $ 100 billion. To meet this goal, the IMF will have to find an effective mechanism and countries beyond the Group of Seven will participate.