G20 finance downside risks dominate global economic outlook
The downside risks still dominate the global economic outlook, with policy priorities for the G20 finance ministers and central bank governors will focus on building resilience and boosting medium-term growth.
Gita Gopinath, the first deputy managing director of the IMF, states in her closing remarks after the third meeting of G20 finance ministers and central bank governors that high levels of policy uncertainty remained a key theme in these discussions.
'But so too did the shared objective to navigate through this uncertainty and seek ways, domestically and collectively, to spur growth.'
She says in April the IMF's World Economic Outlook forecast projected global growth of 2.8% in 2025 and 3.0% in 2026, well below the historical average of 3.7%.
'This included significant downgrades to major economies such as the US and China, owing to greater policy uncertainty, trade tensions and softer demand momentum.
'Global headline inflation was projected to decline, but at a slower pace, reaching 4.3% in 2025 and 3.6% in 2026.'
ALSO READ: SA to prioritise food security, economic growth in G20 presidency, says Ramaphosa
IMF has strong evidence of front-loading ahead of US tariff increases
Gopinath pointed out that since April, economic indicators reflect a complex backdrop shaped by trade tensions.
'We saw strong evidence of front-loading ahead of tariff increases and some trade diversion.
'We also saw an improvement in global financial conditions as select trade deals lowered average tariffs. On inflation, cooling demand and falling energy prices point to a continued decline, albeit with variation across countries.
'While we will update our global forecast at the end of July, downside risks continue to dominate the outlook and uncertainty remains high.'
Against this backdrop, she says, policymakers should focus on resolving trade tensions and implementing macroeconomic policies to address underlying domestic imbalances.
'This includes restoring fiscal space and ensuring debt is on a sustainable path.
'To maintain price and financial stability, monetary policy must be carefully calibrated to country-specific circumstances and use clear and consistent communications. Central bank independence must be protected.
'Structural reforms remain essential to lift medium-term growth and offset demographic shifts, by boosting productivity, supporting job creation and leveraging new technologies.'
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Important to strengthen public finances for global economic outlook
Gobinath also emphasised the importance of strengthening public finances. 'The IMF welcomes the renewed focus on domestic revenue mobilisation, which is indispensable for strengthening public finances and helping countries, especially here in Africa, to achieve development goals.
'Our analysis suggests that low-income countries could raise an additional 7% of gross domestic product (GDP) if they achieved their estimated tax potential.'
She said the IMF is playing its part by supporting countries in reforming domestic tax policies and broadening tax bases, strengthening administration to improve tax collection and their efficiency and improving tax legal certainty to attract foreign and domestic investment.
'We also support a stronger focus on public spending efficiency, which is vital for investing in sustainable development within tight fiscal constraints. The IMF is helping through governance diagnostics, macro-fiscal framework design, and improvements to public investment management and the management of state-owned enterprises.'
She pointed out that although financial conditions have eased since April, trade and geopolitical uncertainty are still elevated and financial stability risks remain in focus.
'Vigilant surveillance and robust supervision remain paramount and recent progress in financial sector oversight must continue, particularly for NBFIs, which now account for more than 50% of the financial sector.
'Improving cross-border payments systems, including through new financial technologies, can help boost growth and strengthen macro-financial stability.'
ALSO READ: Deputy Minister warns low-income countries will be hit hardest by geopolitical tensions
Godongwana also worried about global economic outlook
South Africa's Minister of Finance, Enoch Godongwana, stated that the meeting took place during a period of fragile global economic growth.
'While inflation is gradually moderating and financial conditions have started to stabilise in some regions, uncertainty continues to weigh heavily on global growth prospects.
'Rising trade barriers, persistent global imbalances and new geopolitical risks are significant concerns. Many developing countries, especially in Africa, remain burdened by high and rising debt vulnerabilities, constrained fiscal space and a high cost of capital that limits their ability to invest in their people and their futures.'
He warned that technological shifts and climate-related shocks and extreme weather events pushes the achievement of the Sustainable Development Goals (SDGs) by 2030 further out of reach. 'Developing countries face a staggering financing gap of $4 trillion every year.
The message from the Fourth Financing for Development (FfD4) Conference in Spain was unequivocal: we must act decisively, choose cooperation over fragmentation, unity over division and action over inertia – before the window to deliver on our shared commitments closes.
'In the face of these complex challenges, the G20 must remain a source of strategic global leadership, cooperation and action.'
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Daily Maverick
an hour ago
- Daily Maverick
SA praised for achieving second G20 ministerial declaration on SDGs
The Skukuza declaration noted that a host of global challenges and crises – including the economic slowdown, aid cutbacks and trade protectionism – had significantly hindered progress toward achieving the Sustainable Development Goals. South Africa has been commended for – largely – achieving a second G20 declaration last week to intensify measures to try to reach the Sustainable Development Goals (SDGs) by 2030, including by reducing illicit financial flows (IFFs), especially from Africa. The G20 Skukuza Development Ministerial Declaration from the meeting, which ended in the Kruger National Park on Friday, 25 July 2025, included two 'calls to action' – one for national and international measures to improve social protection, especially for low-income countries, and another to curb illicit financial flows. The declaration stressed the need to set floors (minimal levels) for universal and national social protection systems, which should primarily be financed through domestic resources, supported where necessary by international cooperation as well as non-government sources. The declaration also called for stepping up domestic resource mobilisation, including by combating illicit financial flows – particularly from Africa – especially the outflow of taxes from multinational companies to tax havens. 'Big achievement' Norwegian Minister of International Development Åsmund Grøver Aukrust, who attended the Skukuza meeting, said it was a big achievement to have secured a second ministerial declaration – just a week after the G20 finance ministers' declaration – 'when we're living in a world with very clear attacks on multilateralism'. 'So I would really like to honour the South African G20 presidency for bringing countries together and showing that multilateralism is still functioning and it's still possible to get agreements among very different countries,' he told Daily Maverick. This was a special achievement at a time of 'lack of trust among countries and brutal wars on all continents'. Norway is not a G20 member, but President Cyril Ramaphosa has invited it to participate in all the meetings of South Africa's G20 presidency this year. French support France is a member of the G20, and Thani Mohamed Soilihi, the country's Deputy Minister for Francophonie and International Partnerships, who is responsible for international development assistance, attended the Skukuza meeting. He said France fully supported South Africa's G20 priorities on development, including greater social protection; fighting illicit financial flows to mobilise more domestic resources to finance development; and how to protect global financial goods. He stressed the need for the rest of the global community to step up its efforts to address health issues, especially after the withdrawal of the US from international development assistance, mainly by shutting down its US Agency for International Development (USAid). Soilihi said it had been calculated that the shutdown would cost 14 million lives by 2030. Soilihi noted that the G20 development ministerial gathering had been a perfect place to talk about development issues because it included countries providing development assistance as well as the ministers responsible for development at home. He also convened a side meeting of several ministers of France's Paris Pact for People and the Planet ('4P'), which seeks innovative solutions to development problems. So far, 73 countries are members. US absent The US attended the G20 finance ministers' meeting in Zimbali near Durban on 18 July and thereby adopted its declaration, but did not attend last week's development ministerial. Norway's G20 sherpa, Henrik Harboe, agreed that the absence of the US would affect the impact of the declaration, but added 'that's just a reflection of where we are in the world, that the US did not participate in multilateral agreements this year.' He said it was nonetheless a great achievement that those who attended had agreed to the declaration. He noted, however, that Argentina had insisted on adding a footnote to the declaration, reserving its position 'on certain elements', but nonetheless not blocking its adoption. The chairperson's statement from the meeting included a declaration from Argentina reserving its position on 'all references to the 2030 Agenda' (which set the SDGs). Argentina added that it believed that addressing illicit financial flows lay beyond the scope of the G20 development working group and was better addressed in other G20 mechanisms. SDG challenges and crises The Skukuza declaration nonetheless noted that a host of global challenges and crises – including the economic slowdown, rising debt vulnerability, barriers to gender equality, aid cutbacks, domestic resource gaps, global supply chain disruptions and trade protectionism – had significantly hindered progress toward achieving the SDGs. 'Currently only 35% show adequate progress with 18% being on track and 17% making moderate progress,' it said, adding that financing the SDGs would now require 'a quantum jump from billions to trillions of dollars'. The ministers adopted a call to action towards 'inclusive, resilient, and sustainable development through Universal Social Protection Systems with special priority on Social Protection Floors'. These nationally defined social protection systems and floors should include access to health services and safe drinking water, sanitation and hygiene; basic income security; nutrition and education for children; basic income security for those unable to earn sufficient income; and for the elderly. The declaration also called for stepping up Domestic Resource Mobilisation – raising development at home – by combating illicit financial flows ; implementing effective tax, customs and excise systems; and increasing national savings, trade and investment. 'Efforts to strengthen domestic resource mobilisation continue to be severely undermined by IFFs, base erosion and profit shifting and harmful tax competition, which erode the revenue bases and deprive governments of vital resources for sustainable development, particularly in the context of declining Official Development Assistance,' the declaration said. Call to deliver The ministers called on developed countries to deliver fully on their aid commitments. The Call to Action on illicit financial flows is a set of 10 voluntary and non-binding high-level principles for combating them, including addressing tax avoidance, tax evasion and tax crimes and tackling illicit financial flows; and promoting international cooperation for the recovery of stolen assets. The ministers also agreed that a road map for implementing these measures should be drafted, to be presented to the 2027 G20 presidency for further consideration. The ministers failed to agree on and so did not adopt a call to action on the third main deliverable, which South Africa had hoped for from the development ministerial, to establish an Ubuntu Commission of experts to decide how to protect and strengthen Global Public Goods. Global Public Goods are those which benefit all citizens of the world, says the IMF. They can include a stable climate, scientific knowledge, and disease control. Asked if the consensus on a declaration – especially on illicit financial flows – had been achieved at the cost of avoiding concrete agreements, Norway's Aukrust noted that there was no clear definition of illicit financial flows which everyone agreed on, and that complicated efforts to address them – as did the fact that a 'lot of creative tax planning is going on in the world' and there were also still tax havens and differing tax regimes among countries. 'And those who can buy expensive lawyers can then create company structures that avoid tax.' He noted that some of these tax schemes were illegal, while others might be strictly speaking legal, but were still draining resources from developing countries. 'The fact that we now have a sort of a game plan for doing G20 work on this, that's very important in itself,' but he suggested it would be hard to reach consensus on a road map because of differing perspectives on illicit financial flows among G20 countries. He also noted that the G20 development meeting had operationalised and advanced some of the conclusions from the recent Financing For Development Conference in Seville, Spain. 'And that's very positive.' 'Special victory' for SA He said that this had been a special victory for South Africa because former President Thabo Mbeki had chaired the United Nations Economic Commission panel, which investigated illicit financial flows from Africa, and reported in 2015 that they were causing an outflow of capital from Africa of at least $50-billion a year. But there had since been little progress on illicit financial flows, so it was a major achievement that the G20 as a whole had now agreed to tackle the problem. Norway's G20 sherpa, Henrik Harboe, was a member of Mbeki's IFF panel back in 2015. Asked if Norway and other aid donor countries could step up to fill the aid gap caused by the withdrawal of the US, Aukrust said the problem was that it was not just the US, but several European countries that were reducing aid. 'So we need to think differently and we need to think smarter. We need to have more private investment and we also need to work more for domestic resource mobilisation. And these are all the key factors in Norway's development policy and issues that we are bringing to the table, combined with still being a large and reliable partner.' He stressed that Norway itself was not reducing its own development aid, constituting one percent of its gross national income, beyond the 0.7% target set by the OECD, which few countries were meeting. Soilihi said 'We need to channel more resources because there's been a financing shock, and this is why we want to work as a group, first with the European Union, because we have the capacity to bring meaningful financing when we work together, and second of all, within the community of the 4P, which is a political community of now 73 member states from all continents, all revenues, all income levels, and we have with this group a powerful tool to bring meaningful solutions to the table, bridging the gap between the North and the South.' Soilihi noted that the G20 member states produced 75% of global trade and 90% of global GDP. DM
Daily Maverick
an hour ago
- Daily Maverick
EU must take lead in filling development gap in Africa left by US, says France
And France says it's happy to turn its military bases in the Sahel into schools, after being forced to withdraw its military forces from the region by new, pro-Russia juntas. Other donor countries — especially the European Union and its members — need to step in to fill the gap in development financing left by the withdrawal of the United States, says Thani Mohamed Soilihi, France's minister of state for Francophone and international partnerships, who is responsible for international development assistance. Soilihi attended last week's meeting in Skukuza of the G20 ministers on development, which agreed on the G20 Skukuza Development Ministerial Declaration focusing on the need to increase efforts to meet the Sustainable Development Goals (SDGs) by 2030, mainly by combating illicit finance flows — a big issue for Africa especially — and by establishing floors (minimum levels) of social protection. The declaration said the financing gap for reaching the SDGs by 2030 had undergone a 'quantum jump' from billions to trillions of dollars. Yet, as Soilihi told journalists, the context for financing development was adverse, especially with the withdrawal of the US and the shutting down of the US Agency for International Development (USAID) by the Trump administration. This would have 'very serious and dramatic consequences', especially for health, leaving a development financing hole of some $4-billion a year to be filled. Soilihi said it had been calculated that about 14 million people would die by 2030 because of the end of USAID. The rising public debt of countries was also a problem (which was addressed by the G20 finance ministers earlier in July). And so EU leadership and action were now more important, he said, because the EU was the first contributor of official development aid, providing about 42%. 'So we have a major responsibility, especially when it comes to supporting the health system and finding new ways to build cooperation with the countries that need it the most and have an effective impact on the ground. 'France does a lot for development, but we do a lot more when we're together within the European Union. So we have a major responsibility, and it's important for us to come and to speak as one.' That was why he had convened a meeting in Skukuza of EU development ministers and other heads of delegation to discuss how they could together contribute more to meeting the G20 development targets. He added that to increase the collective effort, France was also holding a meeting of its Paris Pact for People and the Planet (4P) initiative for more innovative development assistance. It includes 73 countries. He noted that having the development ministers of assisting countries — as well as ministers responsible for development in their own countries — all present at Skukuza had been useful for holding a constructive dialogue on how to tackle development problems. France was attending the meeting to help the success of SA's G20 presidency because 'France is really dedicated to the success of multilateralism'. He said the G20 was also advancing the agenda of the Fourth International Conference on Financing for Development, which was held in Seville, Spain, last month. Development priorities Soilihi said France fully supported the three development priorities that SA had set for its G20 presidency. The first was how to join forces to have universal social protection as a driver for development and reducing inequalities. 'This topic is very important and it relates to the importance of the health sector and what we are trying to do to change the way we address health issues.' The second priority was how to fight illicit financial flows (IFFs) as a way to mobilise more domestic resources to finance development. He said IFFs 'hinder states' capacities to mobilise resources for their own development'. The third priority was how to protect global public goods. Soilihi was asked whether France would change the way it offered development assistance to Africa in response to the US withdrawal. He said France had not waited for the US withdrawal but had started 'deeply' changing the way it partnered with Africa in 2017, as announced by President Emmanuel Macron in a major speech in Ouagadougou, Burkina Faso. 'The core principle is that we want partnerships based on mutual interest, we want win-win partnerships, and we want partnerships that are based on the country's needs and what they are asking from their partners.' He said France was not now going to change the way it operated in Africa. 'But we need to bring more means to the table now,' working together with the EU and the 4P partners. He said that when G20 member countries were asked by their public why they were in the G20, they should point out to them that the G20 countries represented 75% of global trade and 90% of global GDP. 'And if we join forces, we have a real power to change things.' Soilihi was asked about France's military strategy in the Sahel and West Africa since it had been forced — under pressure from new, pro-Russia juntas — to withdraw all its forces that had been invited in by the previous elected governments to help them fight jihadist insurgents. He stressed that the governments had asked France for help. 'But if today a number of countries in West Africa no longer want military French bases to have those kinds of cooperations, we'll be happy to change those military bases for schools.' France no longer had a security focus in that region, he said. 'We'll just be there to answer the calls from our partner countries if there is another ground for military cooperation or others. But we'll mostly be focused on ensuring the security of French and European people in Africa. 'And we'll always be in that position of considering the needs of the countries we work with. 'But we've understood loud and clear that in some countries in West Africa, military cooperation is no longer the focus.' DM
TimesLIVE
4 hours ago
- TimesLIVE
‘My first car was a BMW — now I'm driven in one': Ramaphosa says BMW has always been a part of his journey
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