G-20 communique delivers rare show of unity amid Trump trade war

Straits Times

6 days ago

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(From left) South African Treasury Director-General Duncan Pieterse, South African Finance Minister Enoch Godongwana, German Finance Minister Lars Klingbeil, World Bank president Ajay Banga and Egypt Vice-Minister of Finance Yasser Sobhi at a G-20 meeting.
DURBAN - The Group of 20 (G-20) finance ministers and central bank chiefs committed to international policy cooperation in a communique adopted on July 18, finding rare consensus amid escalating tensions over the US trade war.
'The global economy is facing heightened uncertainty and complex challenges, including ongoing wars and conflicts, geopolitical and trade tension,' the communique said. 'We emphasise the importance of strengthening multilateral cooperation to address existing and emerging risks to the global economy.'
The agreement, forged during the G-20 summit in South Africa's eastern KwaZulu-Natal province, was reached despite simmering tensions over US President Donald Trump's trade war, which is set to intensify when
higher tariffs take effect on Aug 1 .
They have strained the G-20's multilateral foundations and complicated South Africa's efforts – as this year's rotating president – to keep the group's agenda on course.
'The fact that all members consented to language covering debt relief, climate finance, tax cooperation, and financial stability during such a period demonstrates the success of the approach that we have adopted,' said South African Finance Minister Enoch Godongwana.
It was the first G-20 communique in 2025.
Tariffs were not explicitly mentioned in the five-page document. But Mr Godongwana played that down, noting it was a relatively recent issue 'and in any case I feel that our discussion on the broad number issues affecting global growth have included the range of risk to economic growth, without singling out tariffs.'
The G-20 communique did note the importance of the World Trade Organisation (WTO) to advance trade issues, while adding that it recognised 'the WTO has challenges and needs meaningful, necessary, and comprehensive reform to improve all its functions.'
'Central bank independence'
Officials also sided with Federal Reserve Chair Jerome Powell, who Mr Trump has excoriated for opposing him by not lowering interest rates, out of concern the levies could spur inflation.
'Central banks are strongly committed to ensuring price stability, consistent with their respective mandates, and will continue to adjust their policies in a data-dependent manner,' the communique said. 'Central bank independence is crucial to achieving this goal.'
South African Reserve Bank Governor Lesetja Kganyago told reporters at a closing press conference that the issue of independence 'came out strongly in the conversation.'
Mr Powell did not attend this G-20, with the Fed being represented by Vice-Chair Philip Jefferson.
The communique also included a prominent reference to 'frequent extreme weather events and natural disasters' which impact economic growth, financial and price stability.' Climate-change language has been a sticking point with the Trump administration in the past.
US Treasury Secretary Scott Bessent
skipped the event in favour of a trip to Japan, but Washington still sent a delegation to represent its interests.
'Major achievement'
By imposing trade levies, scorning South Africa's G-20 motto of 'solidarity, equality and sustainability' and pulling billions of dollars in funding for climate finance and international aid, the US is testing a world order that has dominated since the end of World War II.
That makes achieving a communique all the more impressive, said German Finance Minister Lars Klingbeil prior to its adoption.
'This is a major achievement for the G-20 presidency, which has conducted these negotiations with prudence and skill,' he told reporters at the gathering, at a lush resort on the Indian Ocean near the port city of Durban. Issuing the communique sends 'a strong signal in favor of multilateralism,' he said.
Still, tariff uncertainty has dented global economic growth. The International Monetary Fund in April cut its projection for 2025 to 2.8 per cent from a January forecast of 3.3 per cent and IMF First Deputy Managing Director Gita Gopinath, who attended the G-20, said that while financial conditions have improved, vigilance was important.
'While we will update our global forecast at the end of July, downside risks continue to dominate the outlook and uncertainty remains high,' she said in a statement as the gathering concluded. BLOOMBERG