On December 27, the World Newspaper Syndicate published an article by Indonesian Finance Minister and co-chair of the United Nations Finance Ministers' Climate Action Alliance, entitled "Restoring Trust in Global Leadership". The full text is compiled below
No country has been spared from the crisis of the pandemic, but sadly, global leadership has been lacking in the wake of the crisis. As I pointed out in 2021, the state and pace of the post-pandemic economic recovery will largely depend on multilateral cooperation. This is still true today, as the global economy, which has not yet fully recovered from the pandemic, faces a new risk**: the spread of geopolitical conflicts. Over the past two years, Russia's invasion of Ukraine, Israel's war with Hamas, and military coups in sub-Saharan Africa have exacerbated the fragility of the world economy and displaced countless people.
However, while the status quo calls for greater collective action, multilateral cooperation appears to be waning. We may not be on track to meet the Sustainable Development Goal of eradicating extreme poverty by 2030. If current trends continue, an estimated 7% of the world's population will still be living in extreme poverty by 2030. In addition, climate disasters are becoming more common β a dangerous and worsening trend. It is frustrating that there is a lack of global leadership in tackling these existential threats facing humanity. We would do well to acknowledge this reality and then decide how to change it.
Even in the midst of a crisis, there is good news. The world economy has shown resilience in 2023, despite the slow and uneven recovery since the pandemic. The fight against global inflation seems to be working: global inflation is expected to rise from 8 in 2022Around 8% has steadily declined to 69% and 5. in 20248%γAt the same time, GDP growth in a number of emerging market and developing economies β particularly in East Asia and the Pacific β has exceeded pre-pandemic levels, with China, Vietnam, and Indonesia performing best.
In the medium term, there are three major threats to the global growth outlook: escalating geopolitical tensions, which could lead to economic developmenttechnological decoupling, which could prevent the spread of new digital technologies that increase productivity;Climate change, which has a big impact on agriculture. Unfortunately, many countries have limited policy space to support economic growth. To curb inflationary pressures, monetary policy has largely become tight, while fiscal policy has become increasingly constrained, especially in low-income developing countries facing debt crises and food and energy insecurity.
Geopolitical rivalries and conflicts threaten to undo the fruits of globalization. Over the past 30 years, cross-border** and investment have tripled the size of the global economy and lifted 1.3 billion people out of poverty. But today, new wars and rising tensions threaten to disrupt the ** chain, halt capital flows, lead to the emergence of multiple competing international standards on key and emerging digital technologies, and cause greater income and wealth inequality.
Also worrying is the recent trend towards technological decoupling, particularly between the US and China in key areas such as artificial intelligence and semiconductors. This could lead to decoupling in a wider range of areas, and even lead to the loss of about 5% of GDP in many economies.
Finally, it becomes clear that the impact of climate change on agriculture will exacerbate global inequalities. In the first half of 2022, we witnessed one of the biggest shocks to global food markets in decades, partly due to crop failures caused by extreme weather events.
In view of the differences and disparities facing the international community today, it is more important than ever to strengthen multilateral cooperation. On the positive side, global leaders seem to have learned a lesson from this extraordinary and unprecedented pandemic: the importance of resilience.
Building on this lesson, we must place greater emphasis on the following four priorities: we must strengthen solidarity and multilateralism to pave the way for peaceful conflict resolution and economic cooperation;We must provide targeted financial support and stronger debt management mechanisms, especially for fragile countries;We must design policies that respond to the current high interest rate environment, striking a balance between stability and growth;We must ensure long-term sustainability through comprehensive structural reforms and investment in global green industries.
Monitoring and mitigating potential systemic threats is critical to economic stability. Our actions, both globally and locally, now and in the years to come, will determine whether we rise to the occasion or become a victim of pressing international challenges. Multilateral cooperation is very important and cannot be allowed to fall by the wayside. (Compiled by Madan).