Jakarta, 17 February 2022
Yang Terhormat Bapak Joko Widodo, President of the Republic of Indonesia,
Pak Perry Warjiyo, Governor of Bank Indonesia,
Colleagues Finance Ministers and Central Bank Governors, Head of
Delegations,
Guests, Ladies and Gentlemen,
Good morning, good afternoon, and good evening to all of you.
It is my great honour to welcome you to the first meeting of the G20 Finance
Ministers and Central Bank Governors under Indonesia's 2022 Presidency.
We are pleased that some of you were able to join us in person today, while
some others are joining virtually. I do hope that all of you are enjoying our
hospitality. For those of you who are joining virtually, we hope that you may be able
to attend a meeting in Indonesia in the near future.
Colleagues Ministers and Governors,
Since we last met, the global economy is continuing to recover, but there
are factors that are impacting the pace of the recovery This includes higher food and
energy prices, potential increases of interest rates, the threat of new COVID-19
variants, supply chain disruptions, natural disasters due to climate change and
growing geopolitical tensions.
After a contraction of 3.3 per cent in 2020, the IMF projected that the global
economy would grow by 5.9 per cent in 2021 and moderate to 4.4 per cent in 2022. As we are all witnessing, the global economy has been recovering, but the recovery is uneven.
The emergence of the new variant Omicron has also contributed to heightened
uncertainty in the global economy, and like previous variants of COVID-19 is affecting
countries at different times. Divergence of capacity to tackle the Covid-19 pandemic,
including the vaccine rollouts across countries, are major factors that are leading to
the uneven recovery. These factors will, of course, shape the global economic
landscape ahead.
Indonesia has become President of the G20 at a uniquely challenging time. On
the one hand we must follow through on our commitment to tackle global health challenges
to help countries manage the impacts of Omicron and other new variants that may emerge.
On the other hand, we must manage other near-term risks.
Managing the economic and financial impacts of the pandemic and improving
equitable vaccine access remain a priority to broaden and strengthen global recovery and
ensure we recover together and recover stronger. Directing vaccines to where they are most
needed is crucial to bringing the pandemic under control and reducing the likelihood of the
new variants.
In addition to this the asynchronous recovery poses near-term risks. Inflation risk
remains skewed to the upside, driven by supply chain disruption, labor market mismatches,
wage pressure, and higher energy prices. These measures have been more persistent than
previously expected, and if not dealt with properly, could increase the risk of de-anchoring of
inflation expectation, and impede recovery. While there is a higher likelihood that inflation
expectation in longer term remains anchored, this needs to be closely monitored to avoid the
risks from materializing.
Furthermore, there is a risk that macro-fiscal policy setting within economies may
not adequately balance continued policy support in the midst of more limited fiscal
space. Countries' domestic macroeconomic policy may also cause adverse impacts for other
economies. Divergent economic recovery may have significant implications, since it can lead
to a different pace of policy normalization and potentially create a tighter global financial
condition. In this regard, global coordination, including a discussion on exit strategy will be
critical.
To achieve smooth recovery and achieve a Strong, Sustainable, Balanced, and
Inclusive Growth, there is also a pressing need to address problems that are bound to
leave enduring economic scars. The COVID-19 pandemic has led to profound global
economic disruptions, both on the supply and the demand sides. As history suggests, such disruptions, including high unemployment, weak investment, and low productivity
if not addressed properly and rapidly, are bound to leave long-lasting scars. These
scars can hold back private sector recovery as well as cause long-lasting impact on
public finances. It can also affect both the real sector and the financial sector.
Ultimately this will hamper progress towards strong and resilient economic growth.
Against this background, as the world moves towards recovery, there is an urgent
need to address risks stemming from exiting policy support and scarring
effects. it is important to ensure countries "Recover Together" to avoid the build-up of imbalances. Policies ahead should develop well-calibrated, well-planned, and well- communicated exit strategies, and identify strategies for overcoming scarring effects and ensure that economic growth is inclusive, and that no one is left behind.
Moreover, the pandemic is a harsh reminder of the vulnerability of our
global economy to non-traditional shocks. Climate change could pose a bigger
threat than the pandemic. The G20 must play a role on combating climate change. Not
just to reduce carbon emissions, but also finding ways to raise and direct more financing for
sustainable investments and technologies that facilitate climate action. We need to commit
to a just and affordable transition.
Against this backdrop, we are fortunate to have this gathering at this perfect
time to discuss how to manage the challenging global situation through the priorities
set out in the agenda. This year's theme is how we can recover stronger. With all these
threats lurking simultaneously, there is only way forward. We cannot recover
stronger unless we recover together.
While we are facing a tough situation, I remain optimistic about our ability to
rise to this challenge. Because we as the G20 have a strong legacy as a forum to
address global economic crises. It was formed in 1999, in response to the Asian
Finance Crisis. Almost 10 years later, the G20 evolved to successfully respond to the
Global Finance Crisis, delivering timely and effective actions to preserve international
financial stability.
We are now facing different type of crisis. We have made great strides in
addressing the initial phase of the pandemic. We now must focus on ending the
pandemic for all, and dealing effectively with its aftermath.
To be able to "recover together, recover stronger", we need to promote
productivity, increase resilience and stability, as well as ensure sustainable and
inclusive growth. And I believe that this forum can achieve this.
Colleagues Ministers and Governors,
Today and tomorrow, we will discuss these issues and many others in more
detail. We hope to have tangible deliverables this year to address the
challenges we are facing. We want to show the world the collective
achievements of the G20 in dealing with these pressing issues, and I look
forward to your support in achieving this.
We have to send a clear message to the international community that the G20 has a
strong commitment to action.
Thank you.
No-one is safe until everyone is safe.
Together we will recover stronger.
