The global macroeconomy has undergone unprecedented change in recent years, particularly because of the Covid-19 pandemic. While the G20 had an effective coordinating role in steering the global economy through the 2008 global financial crisis, its role in engineering an inclusive and sustainable recovery from the pandemic has been more mixed. Incomes in the advanced G20 economies are on track to return to pre-pandemic levels by end-2022 but have recovered more slowly in the low- and middle-income countries. At the same time, debt has increased, and inflationary pressures are building due to supply chain disruptions, posing challenges to maintaining fiscal and monetary stability. The Russia-Ukraine conflict has further weakened the global economy, and the negative effects of climate change have also left countries vulnerable. Under the current G20 presidency (Indonesia), efforts are focused on encouraging countries to work together to achieve a stronger and more sustainable global recovery. A range of monetary, fiscal and trade policy issues are developing, and these, in addition to emerging issues, will inform India’s G20 presidency in 2023.

The G20 has discussed issues related to the global macroeconomy since its inception in 1999, when it began as a grouping of finance ministers in the wake of the Asian financial crisis. The G20 Leaders’ Summit began in 2008. Early discussions were centred around financial coordination across the member-states to address the impact of the 2008 global financial crisis. In 2009, countries coordinated efforts through the Financial Stability Board to increase the resilience of the global financial system, while preserving its openness and integrated network structure. As a result, the G20 was able to stabilise financial markets through a series of coordinated financial and monetary stimuli that averted a major economic depression.

Since 2009, the G20 has supported strong, sustainable, and balanced growth, but its actions appear to have had a limited effect in recent years. For instance, actions to contain and counter the fallout from the Covid-19 pandemic have been less successful than those to tackle the 2008 global financial crisis, although national-level responses in the form of monetary and fiscal policies have been substantial. Still, the global recovery from the pandemic is uneven and not inclusive or sustainable. In addition, macroeconomic challenges in the form of increased debt, inflationary pressures, and new risks to global growth due to the Russia-Ukraine conflict have emerged.

Three emerging markets—Indonesia, India, and Brazil—will chair the G20 between 2022 and 2024, with Indonesia as the current chair. Under the banner of ‘Recover Together, Recover Stronger,’ Indonesia has encouraged all countries to work together to achieve a stronger and more sustainable recovery as the global economy continues to be affected by the impacts of the pandemic. This paper discusses the global macroeconomic framework and priority options for India’s presidency in 2023. It provides an overview of the global macroeconomy in terms of growth and recovery and discusses macroeconomic measures to ensure global growth and recovery are inclusive, sustainable, and increasingly digital. It also examines the options and priorities for India’s presidency, including areas in which the United Kingdom and India can collaborate.

The paper can be accessed by clicking here

The article has been authored by Dirk Willem te Velde and Prachi Agarwal.

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