Medan, Indonesia – When G20 finance ministers and central bank governors met in Bali on July 15-16, the summit raised hopes of coordinated action to tackle some of the thorniest issues facing the global economy.
Those hopes withered over the weekend as divisions over the war in Ukraine scuppered any chance of a joint communique to address mounting challenges including soaring inflation, slowing economic growth and widespread shortages of food and goods.
“The failure to reach any kind of consensus on economic threats was inevitable from the start, not least of which is due to the fact that some of the most pressing of these, such as commodity price increases due to supply chain disruption, are being generated by Russia’s invasion of Ukraine,” Ian Wilson, a lecturer in politics and security studies at Murdoch University in Perth, told Al Jazeera.
The summit’s rare failure to produce a communique, instead publishing a 14-paragraph “chair’s summary,” augurs poorly for the prospect of consensus at the headline G20 leaders’ summit in November.
Indonesian Finance Minister Sri Mulyani Indrawati said the decision to scrap the planned communique was “a challenging and difficult situation” and a source of regret.
“Most of the paragraphs are actually supported by our members [but] there is still an issue that they cannot reconcile yet,” Indrawati told media when asked about the communique.
Indonesian Finance Minister Sri Mulyani Indrawati described the failure of G20 finance leaders to agree to a joint communique as a “challenging and difficult situation” [File: Sonny Tumbelaka/Pool via Reuters]
Despite host Indonesia calling on participants to find consensus for the sake of the global economy, the summit splintered between Western countries on the one hand and Russia and China on the other, as the United States and its partners blamed the current economic instability on Russia’s invasion of Ukraine.
“Russia chose this war, having been warned that a broad coalition of countries would respond with sanctions,” US Treasury Secretary Janet Yellen said on Friday. “By starting this war, Russia is solely responsible for negative spillovers to the global economy, particularly higher commodity prices.”
In April, at a previous finance ministers and central bank governors meeting, Yellen and representatives from Canada, Ukraine, France and the United Kingdom walked out of talks in protest of Russia’s attendance.
Russian Foreign Minister Sergey Lavrov earlier this month walked out of a meeting of G20 foreign ministers in what was seen as retaliation for the snub.
Russia’s invasion of Ukraine, which has resulted in shipments being stuck at Ukrainian ports for months on end, has been blamed for disrupting supply chains of everything from edible oils to grain exports.
The invasion has also interfered with exports of raw materials used in chemical fertilisers from Russia and neighbouring Belarus, with knock-on effects on oil palm crops in countries like Indonesia.
Consensus ‘naive’
“Meaningful consensus, on even a limited scale, is simply not possible when there are such deeply conflicting sets of political-economic interest,” Wilson said.
“Facilitation of Russia’s interests as a part of a compromise deal, for example, would undoubtedly be viewed by other G20 nations, such as the US and UK, as helping to facilitate and legitimise its war on Ukraine. A sizable chunk of G20 countries are actively opposed to Russia’s invasion. It is extremely naïve to imagine consensus would be possible and that this wouldn’t overshadow the entire event.”
On Friday, Bank Indonesia Governor Perry Warjiyo reiterated the theme of the Bali talks — “Recover Together, Recover Stronger” — as he pleaded with the G20 members to unite for the good of the global economy, seemingly to no avail.
“This is a global problem, that’s why a global solution is needed,” Warjiyo said.
Radityo Dharmaputra, an international relations lecturer at Airlangga University in Surabaya, said that Indonesia’s efforts to remain neutral on the war and Indonesian President Joko “Jokowi” Widodo’s recent visits to Russia and Ukraine meant that Indonesia lacked leverage to foster effective dialogue at the forum.
“I think this was an expected situation and many warned Indonesia that the G20 would not be a normal summit and would be filled with great power politics,” Dharmaputra told Al Jazeera.
“Appealing to the West that this war is devastating the global economy will be difficult since, at the same time, Ukrainians are being killed and bombed by Russia. The moral stance of the West will be questioned by many of its own citizens if they agree to a compromise with Russia. Indonesia is trapped in its own hole. The Indonesian government, from the very beginning, tried to be neutral in a war. It has some drawbacks since, by staying in the middle, Indonesia can’t really influence the proceedings.”
Dharmaputra added that if Indonesia had taken a clear position and been more critical of Russia, the government could have used its G20 presidency to put pressure on the country either by disinviting Russia or threatening its expulsion if it kept attacking Ukraine.
Indonesian President Joko “Jokowi” Widodo has sought to broker peace between Russia and Ukraine [File: Willy Kurniawan/Reuters]
Indonesia, which currently holds the annual G20 presidency, has been leaning heavily on its historical legacy of a “bebas-aktif”, or non-aligned, approach to diplomacy while seeking to play an active role in brokering peace.
Some analysts, meanwhile, question the assumption the talks were a failure.
“Through this forum, Sri Mulyani Indrawati has succeeded in raising the issue of the need for countries in the world to pay attention to the food crisis and that has been agreed by many countries,” Deni Friawan, an economic researcher at the Centre for Strategic and International Studies, told Al Jazeera.
“The cancellation of this communique was very unfortunate, but also understandable because of the tension that exists between the West and Russia and China.”
Friawan said countries needed to realise there was no “winning” at forums such as the G20 and that blaming Russia for the invasion of Ukraine would not produce a consensus on broader economic issues.
“Like the 2008 global financial crisis, it is necessary to coordinate economic policies, including at the central bank, to overcome the current crisis, so that there are no beggar-thy-neighbour policies such as protectionism or restrictions on food and commodities,” he said.
“That will actually make the crisis worse or become a race to the bottom.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
