Group of Twenty IMF Note — Finance Ministers and Central Bank Governors' Meetings

G-20 Surveillance Note

July 13, 2022

The following executive summary is from a note by the Staff of the IMF prepared for the July 15-16, 2022 G-20 Finance Ministers and Central Bank Governors' Meetings, Bali, Indonesia.
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Executive Summary

The global economic outlook has darkened considerably, while inflation remains high. Since the April 2022 World Economic Outlook, the war in Ukraine has continued and sanctions against Russia have been escalated. In addition to the humanitarian crisis, the economic impact has been felt worldwide, including through commodity prices, gas supply to Europe, supply chains, and financial markets. At the same time, the pandemic has continued to disrupt lives and activity, in particular in China where the virus prompted strict lockdown measures. Overall, recent indicators point to a very weak second quarter. Inflation has surprised on the upside, has broadened beyond food and energy prices, and has remained above targets in many economies. In response, major central banks have announced further monetary policy tightening, which will weigh on the outlook, and global yields have risen. Some economies have employed fiscal measures to help alleviate the impact on households. Amid a financial market risk-off mode, the appreciation of the US dollar has coincided with capital outflows from emerging market economies, putting pressure on vulnerable economies.

Downside risks threaten to worsen a difficult situation. In addition to risks from the pandemic, a prolonged war in Ukraine would increase global fragmentation pressures. Associated inflationary risks could inflame social tensions, and tighter financial conditions would add to challenges from high debt levels. Should inflation fail to respond rapidly to tighter monetary policy, expectations could de-anchor. A more protracted growth slowdown in China would further weigh on global activity. Weather-related climate events could worsen food insecurity.

Policy challenges are sharpening, as many economies must bring down inflation while securing a soft landing. While tightening cycles are underway in most economies, many central banks will need to continue to decisively tighten monetary policy. Delaying action would likely create more severe challenges later. Public sector debt will also need to be brought down. Yet, economies that have been hard hit by the war and sanctions may need to introduce targeted, temporary measures to lessen the impact of high energy and food prices on the most vulnerable people. That said, it will be important that fiscal policy does not work against monetary policy efforts to bring down inflation. With an eye to the future, measures are essential to minimize scarring from the pandemic and to urgently push forward on the green transition.

Joint multilateral efforts are key to overcoming the multiple challenges facing the world. Restoring peace is a priority. In addition, actions must help address global fragmentation pressures and support the most vulnerable people. Reducing trade costs, including by reversing newly implemented export restrictions, can help ease strains on food supply. Scaling-up vaccine absorption capacity, financing the ACT-A, and encouraging technological transfers to speed-up global vaccine production will help end the pandemic. Amid high debt levels and tightening financial conditions, full implementation of the G-20 Common Framework for Debt Treatments is a priority. An international carbon price floor, or equivalent regulations, differentiated by levels of development, should be a central part of a broader policy package to mitigate climate change. Implementing the global agreement on international corporate taxation would reduce tax competition and profit shifting.

Prepared under the guidance of Shekhar Aiyar by a team led by Lone Christiansen, comprising Eric Bang, Mehdi Benatiya Andaloussi, Shan Chen, Davide Malacrino (co-lead), and Bryan Zou. Ilse Peirtsegaele provided administrative support. Prepared based on data available as of July 5, 2022. G-20 Surveillance Notes are available on

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