In a joint statement on Friday 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.
In June, the World Bank forecast that the global economy would avoid a third consecutive decline in growth since a major post-COVID-19 pandemic jump in 2021, with 2024 growth stabilising at 2.6 per cent, in line with 2023, but warned that overall output would remain well less than pre-pandemic levels through 2026.
Today, the G20 Finance Ministers ended their 3rd meeting under the Brazilian presidency with great progress 🚀 The Finance Track consensus document has been endorsed! Find out more about this important step here. — G20 Brasil (@g20org) pic.twitter.com/OKU9uDM8XSJuly 26, 2024
"We are encouraged by the increasing likelihood of a soft landing of the global economy, although multiple challenges remain," the statement said.
"Downside risks include wars and escalating conflicts," it said.
By avoiding explicit mention of the conflicts in Ukraine and Gaza, diplomats have worked to sidestep the disagreements between Russia and major Western nations that derailed a consensus at the finance chiefs' gathering in February.
To defuse the disagreement, Brazil drafted a chair statement on geopolitical issues, stressing that these matters would be addressed by G20 leaders in November.
"The G20 made a wise decision to put geopolitical issues in their place to allow the co-operation agenda to move forward," Brazil Finance Minister Fernando Haddad told a news conference.
Haddad also hailed the group's first-ever declaration calling for co-operation to effectively tax the world's largest fortunes, although that separate joint statement papered over disagreements about the right forum to advance the agenda.
The G20 statement said economic activity had proved to be more resilient than expected in many parts of the world, but the recovery had been highly uneven across countries, contributing to the risk of economic divergence.
The document flagged risks to the economic outlook that remain broadly balanced, with more economic co-operation, faster-than-expected disinflation and technological innovations such as the safe development of Artificial Intelligence (AI) cited among upside risks.
But AI tech could also turn out to be a downside risk to growth, the document said, along with economic fragmentation and persistent inflation keeping interest rates higher for longer, extreme weather events, and excessive debt.
Climate change and significant loss of biodiversity were key topics of concern, the G20 financial leaders agreed, warning that if poorer nations had to shoulder more of the cost of fighting climate change it would make global inequality worse.
"We reiterate the understanding that the cost of inaction is greater than the cost of action," the statement said.
The document also stepped up language calling for a reform of the International Monetary Fund that would give emerging and developing economies a bigger say in the lender of last resort.
The G20 statement underlined the "urgency and importance of realignment in quota shares to better reflect members' relative positions in the world economy".Â
