JAKARTA, Indonesia (Dispatches) - Finance leaders from the Group of 20 major economies warned on Friday that rising inflation and geopolitical risks could threaten a fragile global recovery, as the crisis in Ukraine and the COVID-19 pandemic’s fallout cloud the outlook.
Ukraine crisis overshadowed a meeting of G20 finance ministers and central bank governors, focused heavily on how to whittle down crisis-mode stimulus policies without disrupting a post-pandemic recovery.
In a draft communiqué seen by Reuters, the finance chiefs from the world’s leading economies pledged to use “all available policy tools to address the impacts of the pandemic,” while warning that future policy space was likely to be “narrower and uneven.”
Inflation is currently elevated in many countries due to supply disruptions, a mismatch in supply and demand, as well as rising commodity and energy costs, the draft communiqué said.
“Central banks will act where necessary to ensure price stability in line with their respective mandates, while remaining committed to clear communication of their policy stances,” the ministers and governors said.
The draft statement contained no direct reference to the crisis on the Ukraine-Russia border, saying only the G20 will continue to monitor risks, “including those arising from (current) geopolitical tensions.”
The G20 finance leaders issueed the final communique after their meeting. The talks were held both virtually and in Jakarta.
The diverging pace of recovery from the pandemic is complicating the policy path for central banks. Expected steady interest rate hikes by the U.S. Federal Reserve have drawn attention to the potential fallout for emerging markets.
While cases of the Omicron variant of COVID-19 are receding in many wealthy countries, they are still rising in many developing nations including host country Indonesia.
The G20 finance voiced their supports for ensuring timely and affordable access to COVID-19 vaccines, therapeutics, diagnostics and other medical supplies for low- and middle-income countries, according to the draft communique.