Leaders of the Group of 20 countries will meet in person for the first time since the pandemic broke out to face a global recovery hampered by a slew of stumbling blocks, including an energy shortage driving up fuel and utility prices, new COVID-19 outbreaks, and supply chain bottlenecks that keep the economy humming and goods moving to consumers.
The summit will provide an opportunity for leaders representing 80% of the global economy to discuss — and exert peer pressure on — all of these concerns. Analysts doubt how much progress they can make right immediately to help those who are facing increased expenses on everything from food and furnishings to greater heating bills as the winter season approaches.
Presidents and prime ministers will meet in Rome on Friday before the G-20 summit on Saturday and Sunday, but the leaders of the world’s two largest economies, China and Russia, will not be present. That may not augur well for collaboration, particularly on energy concerns, as climate change takes center stage only days before the United Nations Climate Change Conference in Glasgow, Scotland, opens on Sunday.
Here are some of the economic concerns that G-20 leaders are dealing with:
According to the International Monetary Fund, the main objective for economic recovery is to accelerate global immunization. Despite this, huge headlines on vaccine collaboration are unlikely to emerge from the Rome meeting.
The G-20 countries have advocated vaccine sharing under the United Nations-sponsored COVAX initiative, which has failed to ease severe vaccine shortages in developing countries. Donated dosages are only a fraction of what is required, and industrialized nations are focusing their efforts on booster injections for their own populations.
Prior to the conference, countries discussed improving their health systems rather than a big quantity of vaccines that might be made available.
Rising consumer prices and government stimulus initiatives to assist economies recover from the epidemic may be debated in the meantime, although central banks typically deal with increased prices, and stimulus expenditure is determined at the national level.
Global Tax Rates
One significant economic agreement has already been reached: the G-20 will most likely be a celebration of a worldwide minimum corporate tax accord, which aims to prohibit multinational corporations from stashing riches in nations where they pay little or no taxes.
The accord, which was negotiated by more than 130 nations, was signed by all G-20 governments, and it now confronts an ambitious deadline to be ratified and executed by 2023.
President Joe Biden of the United States has linked it to his domestic agenda, arguing that a global minimum tax would allow the US to charge greater taxes without risking firms moving earnings to tax havens. Because so many global corporations have their headquarters in the United States, adoption there is critical.
The accord also aids in the reduction of trade tensions between the United States and Europe. It helps countries like France, Italy, and Spain to avoid imposing digital services taxes on Google, Facebook, and Amazon, which are all based in the United States.
Biden heads to the G-20 with his tax and economic plan still up for debate in Congress. That means he won’t be able to show that the US is a worldwide leader in corporate taxation, even if his national security advisor, Jake Sullivan, claimed G-20 leaders are aware of the nature of legislative negotiations.
“‘Is President Biden on schedule to deliver on what he said he would deliver?’ they’ll ask. And we think he’ll be able to achieve it one way or the other,” Sullivan added.
High Global Energy Prices
Because it includes delegates from key energy producers Saudi Arabia and Russia, big consumers in Europe and China, and the United States, which is both, the summit provides a chance for debate on high oil and gas prices.
Presidents Xi Jinping of China and Vladimir Putin of Russia have agreed to participate via videoconference.
“Perhaps the most essential thing the G-20 could do is to encourage those who are significant energy providers to think about their future,” said Holger Schmieding, chief economist at Berenberg Bank.
If energy prices in the developed world are too high, it would only hasten the transition away from fossil fuels, “which is ultimately terrible for the providers in the long term,” he added.
Biden plans to meet with other major leaders about energy costs, according to the White House, with oil recently reaching a seven-year high in the United States at over $84 per barrel and the worldwide Brent crude benchmark reaching a three-year high at over $86.
Claudio Galimberti, senior vice president of analysis at Rystad Energy and a specialist in oil market demand, stated, “We are obviously in an energy crisis, there is no other way to describe it.”
However, he believes the G-20 “cannot take any decision that has an immediate consequence.”
OPEC, lead by Saudi Arabia, and its allies, including Russia, called OPEC+, have so far resisted Biden’s calls to expand output faster than the current monthly rate of 400,000 barrels per day until next year.
In one bright light, Russian President Vladimir Putin instructed state-controlled corporation Gazprom to pump additional gas into European storage facilities, where prices have quadrupled this year and worries of winter shortages have spread.
However, producing countries are “in a strong position,” according to Galimberti. “No one has the power to exert pressure on OPEC+.”