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 – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
