G20 sees growing chance of soft landing for global economy in draft communique

GROUP of 20 finance leaders are expected to cheer the increasing likelihood of a soft landing of the global economy as inflation continues to come down from elevated levels, according to a draft communique seen by Reuters on Tuesday (Jul 23).

The G20 finance ministers and central bank chiefs gathering this week in Rio de Janeiro are also expected to mention unspecified “wars and escalating conflicts” as a downside risk for the global economy, according to the document.

“We are encouraged by the increasing likelihood of a soft landing of the global economy, although multiple challenges remain,” the draft communique said.

The document flags risks to the economic outlook that remain broadly balanced, with faster-than-expected disinflation and technological innovations cited among upside risks.

On the other hand, the document notes downside risks such as escalating conflicts, economic fragmentation and persistent inflation keeping interest rates higher for longer.

“Economic activity has proved to be more resilient than expected in many parts of the world, but the recovery has been highly uneven across countries, contributing to the risk of economic divergence,” the document said. REUTERS