G20 Financial Leaders Predict 'Soft Landing' for Global Economy Amid Concerns

G20 financial leaders have indicated that the global economy is likely heading for a 'soft landing', but caution that wars and escalating conflicts could threaten this outlook. They emphasized the importance of global cooperation and the need to tackle economic inequality and climate change, while highlighting risks and benefits of technological advancements.

G20 financial leaders said on Friday the global economy was likely heading for a 'soft landing', but warned wars and escalating conflicts could endanger this outlook, while increased global cooperation could strengthen growth. In a joint communique after a two-day meeting in Brazil, finance ministers and central bankers from the Group of 20 major economies also committed to resist protectionism in trade and stressed the need to reduce economic inequalities.

Last month, the World Bank forecast that the global economy would avoid a third consecutive decline in growth since a major post-pandemic jump in 2021, with 2024 growth stabilizing at 2.6%, in line with 2023, but warned that overall output would remain well below pre-pandemic levels through 2026. 'We are encouraged by the increasing likelihood of a soft landing of the global economy, although multiple challenges remain,' the communique said. 'Downside risks include wars and escalating conflicts,' it said.

Diplomats have worked to sidestep disagreements between Russia and major Western nations by avoiding explicit mention of the conflicts in Ukraine and Gaza in the communique, opting instead to address these matters during G20 leaders' meeting in November. Brazil's Finance Minister Fernando Haddad praised the decision to prioritize the cooperation agenda.

The G20 also issued its first-ever declaration calling for cooperation to tax the world's largest fortunes, although disagreements persist regarding the appropriate forum for advancing this agenda. The communique noted that economic activity was more resilient than expected, but uneven recovery across countries posed risks of economic divergence.

The document flagged a range of risks to the economic outlook, noting that significant downside risks included geopolitical conflicts, economic fragmentation, persistent inflation, extreme weather events, and excessive debt. Climate change and biodiversity loss were major concerns, with the G20 emphasizing that poorer nations should not bear disproportionate costs of fighting climate change. The communique also highlighted the urgency of reforming the International Monetary Fund to give emerging and developing economies a greater voice.

(With inputs from agencies.)