After signs of stabilization at the end of 2019, global economic growth is expected to pick up modestly in 2020 and 2021, concludes the G20 finance communique on Sunday.
“The recovery is supported by the continuation of accommodative financial conditions and some signs of easing trade tensions. However, global economic growth remains slow and downside risks to the outlook persist, including those arising from geopolitical and remaining trade tensions, and policy uncertainty. We will enhance global risk monitoring, including of the recent outbreak of COVID-19. We stand ready to take further action to address these risks, ” the communique isued by the finance officials from the world’s 20 biggest economies said.
“We remain committed to use all available policy tools to achieve strong, sustainable, balanced and inclusive growth, and safeguard against downside risks, while implementing structural reforms to enhance our growth potential. Fiscal policy should be flexible and growth-friendly while ensuring debt as a share of GDP is on a sustainable path.”
US Treasury Secretary Steven Mnuchin played down the importance of the language included, calling it a “purely factual” reference to work being done by the FSB. But several G20 sources said it marked progress toward greater recognition of the economic risks posed by climate change.
Saudi Finance Minister Mohammed al-Jadaan, hosting the meeting in Riyadh, told reporters that climate change remained a very important issue on the Saudi G20 presidency agenda and that there had been discussions related to “financial risks at large” linked to the issue.
Discussions related to “climate change and environmental protection” would continue at ministerial meetings and in technical groups throughout the year, he said.
Delegates worked out the compromise this weekend after Washington objected to a proposal to add “macroeconomic risk related to environmental stability” to a list of downside risks to global growth, two G20 diplomatic sources said.
The final version of the communique eliminated those words from the first paragraph, leaving the only mention of climate concerns in the context of the work being done by the FSB further down in the document.
That passage reads: “Mobilizing sustainable finance and strengthening financial inclusion are important for global growth and stability. The FSB is examining the financial stability implications of climate change.”
“We welcome private sector participation and transparency in these areas.”
Concerns about the economic impact of climate change have escalated in recent years and pressure is mounting on business to accelerate the shift to a low-carbon economy ahead of United Nations climate talks in November.
A report issued last week forecast the world’s financial services sector risks losses of up to $1 trillion if it fails to respond quickly to climate change and is hit by policy shifts such as the introduction of a carbon tax.
The International Monetary Fund included climate-related disasters in a list of risks that could derail a “highly fragile” projected recovery in the global economy in 2020.
It estimated that a typical climate-related natural disaster reduced growth by an average of 0.4 percentage points in the affected country the year it occurred.
“We should not hide away from what is going on. The climate crisis is upon us,” IMF chief Kristalina Georgieva told a conference in Riyadh on Friday ahead of the G20 talks.
In a statement after the meetings ended, Georgieva called for concerted action “to scale up climate change mitigation and adaptation.”
The communique forecasts a modest pick-up in global growth this year and next, but cites downside risks to this outlook stemming from geopolitical and remaining trade tensions and policy uncertainty.