Weak Global Economy, High Inflation, and Rising Fragmentation Demand Strong G20 Action

Working together to address common challenges, and building economic bridges, will be crucial to improve lives.

When the G20 finance ministers and central bank governors meet in Gandhinagar next week, the world will be looking for joint action to address rising economic fragmentation, slowing growth, and high inflation. Agile multilateral support is vital to tackle common challenges posed by debt vulnerabilities, climate change, and limited concessional financing—especially for countries hit by shocks not of their making.

Outlook: resilience amid challenges

In April, the IMF projected global growth at 2.8 percent in 2023, down from 3.4 percent in 2022. The bulk of it–over 70 percent–is expected to come from the Asia-Pacific region.

Yet, recent high frequency indicators paint a mixed picture: weakness in manufacturing contrasts with resilience in services across the G20 countries and strong labor markets in advanced economies. At the same time, financial fragilities uncovered by tight monetary policy require careful management—particularly as restoring price stability remains a priority.

Global headline inflation seems to have peaked, and core inflation has eased somewhat, particularly in India. But in most G20 countries—especially advanced economies—inflation remains well above central banks’ targets.

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