U.S. Treasury Secretary Janet Yellen speaks at a press conference ahead of the Group of 20 Finance Ministers and Central Bank Governors meeting in São Paulo, Brazil, Tuesday, February 27, 2024. Tuan Fernandez/Bloomberg via Getty Images
A soft landing for the global economy is increasingly likely, Treasury secretaries said in a draft closing statement for this week's G20 meeting in Brazil, with faster-than-expected inflation rising among the risks. It pointed out.
“We note that the possibility of a soft landing for the global economy is increasing,” the draft communiqué, dated February 23 and obtained by Bloomberg News, reads. “Risks to the global economic outlook are more balanced. Upside risks include a faster-than-expected rise in inflation.”
The document is not final and its wording will be subject to intensive negotiations in São Paulo before the finance minister arrives on Wednesday. Sharp disagreements have already emerged at the G20 meeting, particularly over the wars in Ukraine and Gaza that have roiled global politics. The draft law mentions “conflicts in many regions of the world” as one of the challenges, but also mentions “geo-economic tensions,” although the name is not specified.
The statement reflects a relatively optimistic view of the global economy, which has struggled in recent years to overcome the effects of the pandemic, soaring inflation and soaring interest rates.
The G20 draft report said that inflation has receded in most countries, thanks to “appropriate monetary policies, easing supply chain bottlenecks” and easing commodity prices.
With American “support”
Last month, the International Monetary Fund raised its forecast for global economic growth in 2024 to 3.1%, citing stronger-than-expected economic expansion in the United States and financial support from China.
Treasury Secretary Janet Yellen emphasized the role of the United States, saying at a press conference in Sao Paulo on Tuesday that “America's path to a soft landing has supported global growth.”
Yellen acknowledged risks to the outlook, including protracted conflicts in Ukraine and the Middle East that have caused soaring commodity prices and disrupted supply chains, and debt problems plaguing low-income countries. “Inflation is falling in many countries,” he said, but stopped short of suggesting that a rate cut might be appropriate now.
G20 officials are struggling with the language they use to describe military conflicts like Russia's invasion of Ukraine, which are also hurting economies around the world. This group includes not only the United States and its Western allies, but also Russia and China. Monday's preliminary session included a day of negotiations on how to address the economic effects and risks of war.
Ministers are expected to try to bracket some of the controversial topics to prevent them from preoccupying themselves with other issues. Hosting the conference in São Paulo's iconic Biennale Center, surrounded by lush parks, Brazil is promoting an agenda that includes poverty, sustainable development and reform of world institutions.
With all opinions divided, it is unclear how much of this agenda will be decided at this meeting. In the final communiqué, ministers typically outline their shared views on the global economy and the challenges ahead.
