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Consensus eluded a meeting of finance ministers and central bank governors of the Group of 20 countries that ended Tuesday in India as members failed to bridge their differences on Russia’s war in Ukraine.

“We still don’t have a common language on the Russia-Ukraine war,” Indian Finance Minister Nirmala Sitharaman told reporters after the two-day meeting wrapped up in Gandhinagar city without issuing a joint statement.

Instead, India, which is the president of the group this year, issued what is called a chair summary and an outcome document in which it summed up the talks and noted disagreements.

According to the chair summary, China and Russia objected to paragraphs referring to the war that said it was causing “immense human suffering” and “exacerbating existing fragilities in the global economy.”

The failure to reach an accord was not unexpected. As the war in Ukraine is a matter of sharp diplomatic differences, India has not been able to forge a consensus document at any of the key G20 events held so far.

Several G20 members also condemned Russia for refusing to extend a deal to allow critical Ukrainian grain exports through the Black Sea, India’s finance minister said at a press conference.

Several members condemned it saying that shouldn’t have happened,” Sitharaman said. “Food passing through the Black Sea shouldn’t have been stopped or suspended.”

Russia’s quitting the deal has sparked fears about the impact on low-income countries in Asia and Africa, where high food prices already have pushed more people into poverty.  

While India has remained mostly neutral on the Ukraine war, it has expressed concern about the impact of the conflict on developing countries. It said its priority during its presidency is to focus on the need to help nations grappling with a debt crisis in the wake of the COVID-19 pandemic and the Ukraine conflict.

Sitharaman said members discussed the overall global economic outlook, specifically food and energy issues, climate financing and how to improve assistance to debt-distressed countries. She indicated that progress had been made on key issues.

More than half of all low-income countries are near or in debt distress, twice as many as in 2015, according to U.S. Treasury Secretary Janet Yellen. Before the meeting began, she said that ending the war in Ukraine is “the single best thing we can do for the global economy.”

The chief of the International Monetary Fund, Kristalina Georgieva, emphasized the need for a more effective and speedier debt restructuring process at the meeting.

“The costs of delays in reaching agreement on needed debt treatments are borne acutely by borrower countries and their people, who are least able to bear this burden,” she said.

Global growth is slowing and divergence in the economic fortunes of countries was a persistent concern, Georgieva said. “The world today is more shock-prone and fragile, with climate change, pandemics and Russia’s invasion of Ukraine all causing widespread turmoil.”

World Bank President Ajay Banga echoed similar fears. He spoke of “mistrust that is quietly pulling the Global North and South apart at a time when we need to be uniting,” and said that that “lack of progress was in danger of splitting the global economy to the detriment of the world’s poorest.”

India, which wants to emerge as the voice of what it calls the “Global South” has also been urging the G20 to forge a consensus on reforms for multilateral development banks.

A G20 panel has said in a report that international development banks must create a new funding mechanism and triple sustainable lending by 2030 to eliminate poverty and achieve climate goals. It also called for big changes in their operations.

The summit meeting of the G20 is scheduled to be held in September.
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Britain’s financial watchdog on Monday proposed toughening up safeguards against the illegal marketing of financial products on social media by applying a stringent “consumer duty” that is being rolled out to banks, funds and insurers on July 31.

The Financial Conduct Authority has said its new duty will be a step change in protecting retail investors after years of mis-selling scandals, by forcing firms to demonstrate how they are giving consumer good outcomes.

“Where applicable, the Consumer Duty will raise our expectations of firms communicating financial promotions on social media above the requirement… to be ‘clear, fair and not misleading’,” the FCA said in proposals out to public consultation.

“Firms advertising using social media must consider how their marketing strategies align with acting to deliver good outcomes for retail customers.”

In the fourth quarter of last year, nearly 70% of amended or withdrawn financial marketing following FCA intervention involved a promotion on websites or social media, the FCA said.

The watchdog is targeting so-called ‘finfluencers’ or widely followed people on social media who promote financial products.

“Consumers exhibit high levels of trust in finfluencers, but their advice can often be misleading,” the FCA said.

“Promoting a regulated financial product or service without approval of an FCA authorized person, or providing financial advice without FCA authorisation, may be a criminal offense.”

Promotions should also include risk warnings, it added.
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China’s economic growth missed forecasts in the second quarter of the year, adding to worries over surging youth unemployment and a weak property sector and raising the likelihood the government will double down on support for the faltering post COVID-19 recovery.

The world’s second largest economy grew at a 6.3% annual pace in the April-June quarter, much slower than the 7% plus growth analysts had forecast given the anemic pace of activity the year before.

Unemployment of youths aged 16 to 24 rose to a record 21.3% in June, up from 20.8% the month before.

Investment in property development, a vital driver of both industrial and consumer demand, sank 7.9% in the first half of the year compared to a year earlier in a troubling sign of persisting weakness in an industry that slowed even before the pandemic as the government moved to rein in excessive borrowing.

Officials have acknowledged that the economy is facing stiff headwinds, but said they expected growth to still reach the ruling Communist Party’s official target for this year of about 5%.

The government will adjust policies to stabilize growth, National Bureau of Statistics spokesman Fu Linghui said at a news conference Monday.

Quarterly growth, the usual measure for other major economies, was 0.8%, according to government data released Monday, in line with expectations but down sharply from 2.2% in January-June.

Analysts have been far less optimistic than the Chinese government about the outlook for the year, given weakening demand for Chinese exports in other major economies.

The numbers are a “worrying result,” said Moody’s Analytics economist Harry Murphy Cruise.

“China’s recovery is going from bad to worse,” he said. “After a sugar injection in the opening months of 2023, the pandemic hangover is plaguing China’s recovery.”

Government spending is likely to help key industries like real estate and construction, but won’t be a “silver bullet,” he said in a commentary.

The 6.3% growth in China’s gross domestic product from April to June outpaced a 4.5% expansion in the previous quarter.

The still robust growth is largely due to the economy growing just 0.4% a year earlier in April-June of 2022 amid strict lockdowns in Shanghai and other cities during COVID-19 outbreaks.

Apart from more government spending, regulators may cut interest rates and take other measures to free up credit, Marcella Chow, global market strategist at J.P. Morgan Asset Management wrote in a report.

“The weak economic readings suggest an urgency in escalating policy support so as to stabilize expectations,” Chow said.

Earlier this year, growth was boosted as people flocked to shopping malls and restaurants after nearly three years of “zero-COVID” restrictions were removed in late 2022.

The government’s growth target of “around 5%” was seen as a conservative goal. It can only be met if the economy maintains close to its current level of growth.

Data released earlier showed exports declined 12.4% in June from a year earlier as global demand faltered after central banks in U.S. and Europe raised interest rates to curb inflation.

Retail sales, an indicator of consumer demand, in June rose 3.1% from the same period in 2022. That’s seen as a strong point, but not strong enough, analysts said.

Industrial output, which measures activity in the manufacturing, mining and utilities sectors, beat analyst’s expectations, rising by 4.4% in June compared to the same month a year earlier.

China’s policymakers are not having to fight inflation, but may end up having to contend with its opposite, deflation, or falling prices due to weak demand. In recent months, the authorities have tried to spur lending and spending, with mixed success.

Fixed-asset investment — spending on factory equipment, construction and other infrastructure projects to drive growth — rose by a still tepid 3.8% for the first half of 2023 compared to the same period of 2022.
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Redoubling support for war-stricken Ukraine is the “single best” way to aid the global economy, U.S. Treasury Secretary Janet Yellen said Sunday, along with boosting emerging economies and tackling debt distress.Yellen also said on the sidelines of a G20 finance ministers’ summit in India she would “push back” on criticism there was a tradeoff between aid to Ukraine and developing nations.

“Ending this war is first and foremost a moral imperative,” she told reporters in Gandhinagar. “But it’s also the single best thing we can do for the global economy.”

Yellen also pointed to efforts to tackle debt distress faced by struggling economies, bank reform and a global tax deal, and warned it was “premature” to talk of lifting tariffs on China.

Russia’s invasion of Ukraine — both countries are global breadbaskets that together exported almost a quarter of the world’s wheat supply — triggered shockwaves in economies worldwide by sending prices for food and fuel shooting up.

Japan’s Finance Minister Shunichi Suzuki, speaking after a G7 meeting of ministers, “reconfirmed the G7’s unshakeable support” to Ukraine.

“We confirmed that Russia-owned assets that are under the G7’s supervision would not be transferred until Russia pays damages to Ukraine,” Suzuki said, adding that Moscow should also “pay long-term reconstruction costs.”

Any discussion on Ukraine is awkward for G20 host India, which has not condemned Russia’s invasion but is also part of the Quad grouping alongside Australia, the United States and Japan.

Yellen also cited debt restructuring progress in Zambia, which she discussed with Chinese officials in Beijing last week, and said she expected Ghana and Sri Lanka debt treatments would be finalized soon.

She said it was still too soon to lift restrictions placed on China during a trade war launched by former U.S. President Donald Trump.

“Tariffs were put in place because we had concerns with unfair trade practices on China’s side, and our concerns with those practices remain, they really haven’t been addressed,” Yellen said. “Perhaps over time this is an area where we could make progress, but I’d say it is premature to use this as an area for de-escalation.”

Yellen pointed to other work tackling debt distress and the reform of multilateral development banks, including the World Bank and other regional lenders, in efforts she said could unlock $200 billion over the next decade.

More than half of all low-income countries are near or in debt distress, double the case in 2015, she said.

G20 finance chiefs and central bank heads are due to meet Monday and Tuesday in Gandhinagar in Gujarat, the state where India’s independence leader Mahatma Gandhi was born.

World Bank chief Ajay Banga warned of a “deep mistrust… quietly pulling the Global North and South apart” over issues such as the climate change crisis, post-pandemic recovery efforts, the war in Ukraine and a lack of progress in the fight against poverty.

“The Global South’s frustration is understandable,” Banga said in an op-ed. “In many ways they are paying the price for the prosperity of others. When they should be ascendant, they’re concerned promised resources will be diverted to Ukraine’s reconstruction; they feel aspirations are being constrained because energy rules aren’t applied universally, and they’re worried a burgeoning generation will be locked into a prison of poverty.”

The International Monetary Fund said finding common efforts to tackle the weak global economy would be crucial.

The world will be looking for joint action to address rising economic fragmentation, slowing growth, and high inflation,” the IMF said in a statement ahead of the meeting.

The G20 will also discuss cryptocurrency regulations, as well as making access to financing to mitigate and adapt to the impacts of climate change easier for developing nations.”In the Global North, climate change means emissions reductions,” Banga said.  

“But in the Global South, it is a matter of survival, because hurricanes are stronger, heat-resistant seeds are in short supply, drought is destroying farms and towns, and floods are washing away decades of progress.”

A newly agreed first step on a fairer distribution of tax revenues from multinational firms reached by 138 countries Wednesday is also set to be delivered during the G20 talks.
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