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.
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.
“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.
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.”
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How to Improve your Credit Score in Canada
Improving your credit score is important for many reasons. First, it could help you get a lower interest rate on your loans or mortgages. Second, it could help you qualify for better rates on car loans, cell phone plans, and other types of loans. Third, having a good credit score could increase your chances of being approved for a job or apartment. Finally, keeping your credit score high can help you avoid becoming financially stressed in the future. Here are some of the ways you can improve your credit score in Canada:
Monitor your payment history
Your payment history is the most important factor for your credit score.
To improve your payment history:
- always make your payments on time
- make at least the minimum payment if you can’t pay the full amount that you owe
- contact the lender right away if you think you’ll have trouble paying a bill
- don’t skip a payment even if a bill is in dispute
Use credit wisely
Don’t go over your credit limit. If you have a credit card with a $5,000 limit, try not to go over that limit. Borrowing more than the authorized limit on a credit card can lower your credit score.
Try to use less than 35% of your available credit. It’s better to have a higher credit limit and use less of it each month.
- a credit card with a $5,000 limit and an average borrowing amount of $1,000 equals a credit usage rate of 20%
- a credit card with a $1,000 limit and an average borrowing amount of $500 equals a credit usage rate of 50%
If you use a lot of your available credit, lenders see you as a greater risk. This is true even if you pay your balance in full by the due date.
To figure out the best way to use your available credit, calculate your credit usage rate. You can do this by adding up the credit limits for all your credit products.
- credit cards
- lines of credit
For example, if you have a credit card with a $5,000 limit and a line of credit with a $10,000 limit, your available credit is $15,000.
Once you know how much credit you have available, calculate how much you are using. Try to use less than 35% of your available credit.
For example, if your available credit is $15,000, try not to borrow more than $5,250 at a time, which is 35% of $15,000.
Increase the length of your credit history
The longer you have a credit account open and in use, the better it is for your score. Your credit score may be lower if you have credit accounts that are relatively new.
If you transfer an older account to a new account, the new account is considered new credit.
For example, some credit card offers come with a low introductory interest rate for balance transfers. This means you can transfer your current balance to this new product. The new product is considered new credit.
Consider keeping an older account open even if you don’t need it. Use it from time to time to keep it active. Make sure there is no fee if the account is open but you don’t use it. Check your credit agreement to find out if there is a fee.
Limit your number of credit applications or credit checks
It’s normal and expected that you’ll apply for credit from time to time. When lenders and others ask a credit bureau for your credit report, it’s recorded as an inquiry. Inquiries are also known as credit checks.
If there are too many credit checks in your credit report, lenders may think that you’re:
- urgently seeking credit
- trying to live beyond your means
How to control the number of credit checks
To control the number of credit checks in your report:
- limit the number of times you apply for credit
- get your quotes from different lenders within a two-week period when shopping around for a car or a mortgage. Your inquiries will be combined and treated as a single inquiry for your credit score.
- apply for credit only when you really need it
“Hard hits” versus “soft hits”
“Hard hits” are credit checks that appear in your credit report and count toward your credit score. Anyone who views your credit report will see these inquiries.
Examples of hard hits include:
- an application for a credit card
- some rental applications
- some employment applications
“Soft hits” are credit checks that appear in your credit report but only you can see them. These credit checks don’t affect your credit score in any way.
Examples of soft hits include:
- requesting your own credit report
- businesses asking for your credit report to update their records about an existing account you have with them
Use different types of credit
Your score may be lower if you only have one type of credit product, such as a credit card.
It’s better to have a mix of different types of credit, such as:
- a credit card
- a car loan
- a line of credit
A mix of credit products may improve your credit score. Make sure you can pay back any money you borrow. Otherwise, you could end up hurting your score by taking on too much debt.
UK Economy Probably Entered Its Worst Slump Since Lockdown – BNN
(Bloomberg) — The UK economy probably shrank for the first time since the nation was in a coronavirus lockdown at the start of 2021, adding to pressure for action from the contenders vying to take over as prime minister.
Gross domestic product for the second quarter probably shrank 0.2%, according to a survey of economists by Bloomberg News ahead of the official figures due to be published this week.
The drop would mark a pause in the recovery from the pandemic and the start of a more protracted downturn, which the Bank of England expects to last into early 2024. That outlook is roiling the race to replace Boris Johnson as leader of the ruling Conservative Party and prime minister.
Liz Truss and Rishi Sunak, who are competing in the race set to conclude in September, spent the weekend promoting their ideas to help. The central bank last week forecast that inflation will accelerate past a 40-year high to more than 13% this year, weighing heavily on consumer spending power.
Former Prime Minister Gordon Brown and the BOE’s former Chief Economist Charlie Bean this weekend added their voices pushing for an aid package that would help those hardest hit. They say the measures Johnson’s government brought forward earlier this year aren’t enough.
“The main package for households was worth about £15 billion, and there is certainly a case for something of at least that magnitude again,” Bean said in an interview on Times Radio.
Brown called for an emergency budget, warning that almost half of all households will tip into fuel poverty this winter because of a surge in the cost of electricity and natural gas.
“A financial time bomb will explode for families in October as a second round of fuel price rises in six months sends shock waves through every household and pushes millions over the edge,” Brown wrote in the Observer newspaper. He’s scheduled to appear on ITV on Monday.
The remarks and the outlook for rising natural gas prices add to the pressure on Truss and Sunak to explain what they would do to revive the economy.
Truss, the front-runner, has said she’d push through immediate tax cuts to help. Sunak, the former chancellor of the exchequer, says those measures would take too long to implement and wouldn’t help enough of those most in need.
A YouGov poll published on the front page of the latest edition of the Times, which is backing Sunak, suggested that most voters would rather the next prime minister focus on tackling inflation and the looming cost-of-living crisis rather than slashing taxes.
The economic backdrop is deteriorating rapidly as the surge in inflation makes businesses and consumers more cautious about spending.
The GDP report probably will show that the economy shrank 1.2% in June alone, held back in part by bank holidays to mark Queen Elizabeth II’s jubilee.
The BOE warned last week that the UK probably will enter recession in the fourth quarter of this year and keep shrinking for the whole of next year.
Energy prices are the biggest factor weighing on households. Starting in October, utilities will be allowed to charge £4,000 ($4,860) a year for the average power and gas bill, the highest level ever and almost four times the level of a year ago.
The BOE last week said gas futures are now about double the level they were in May, triggering a big increase in the central bank’s outlook for inflation.
Truss spent the weekend drawing attention to her vow for an immediate tax reduction and said that measure could help prevent a recession.
“I do not believe in resigning our great country to managed decline or accepting the inevitability of a recession,” Truss wrote in the Sunday Telegraph. “I would use this to immediately tackle the cost-of-living crisis by cutting taxes, reversing the rise on national insurance and suspending the green levy on energy bills.”
- UK Energy Price Cap Estimate Tops £4,000 for the First Time
- Truss to Speed Up UK Tax Cuts in Leadership Bid, Telegraph Says
- BOE Governor Tips Into Political Storm Over Surging UK Inflation
(Adds YouGov poll in 11th paragraph)
©2022 Bloomberg L.P.
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