G20 Warns of Global Economy Challenges, Geopolitical Tension

The meeting aims to review global economic developments at a time characterized by growth slowdown and mounting pressures resulting from record debt burdens. (G20 website)
The meeting aims to review global economic developments at a time characterized by growth slowdown and mounting pressures resulting from record debt burdens. (G20 website)
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G20 Warns of Global Economy Challenges, Geopolitical Tension

The meeting aims to review global economic developments at a time characterized by growth slowdown and mounting pressures resulting from record debt burdens. (G20 website)
The meeting aims to review global economic developments at a time characterized by growth slowdown and mounting pressures resulting from record debt burdens. (G20 website)

Group of 20 finance leaders meeting in Brazil this week are expected to make only a passing reference in their closing statement to regional conflicts, according to a draft version seen by Reuters, due to deep divisions over wars in Gaza and Ukraine.

US Treasury Secretary Janet Yellen on Tuesday called on allies to move forward urgently to unlock the value of frozen Russian sovereign assets to help Ukraine.

"Risks to the global economic outlook are more balanced," with faster-than-expected disinflation and more growth-friendly fiscal consolidation underpinning growth, the draft said.

"Among the downside risks to the global economy are [wars and] escalating conflicts, geoeconomic fragmentation, rising protectionism, and trade routes disruptions," the draft communique said.

The reference to "wars" in brackets reflects efforts to reach a consensus on the final language, said a person familiar with the matter.

G20 finance officials are expected to set aside geopolitics and focus on global economic issues as they gather in Sao Paulo this week.

Brazil's coordinator of the finance track at G20, Tatiana Rosito, said on Tuesday that the group is moving towards a short communique that reflects Brazilian priorities.

In the draft communique, the G20 finance leaders gave an optimistic view on the outlook for price pressures. Inflation has receded in most economies, they said, thanks in part to "appropriate" monetary policies, easing supply chain bottlenecks and moderating commodity prices.

The draft also said the G20 group reaffirms their existing exchange-rate commitment, which warns against excess volatility and volatile currency moves as undesirable for economic growth.

Meanwhile, Yellen said Israel has agreed to resume tax revenue transfers to the Palestinian Authority to fund basic services and bolster the West Bank economy. She called on Israel to allow commerce to resume there for the sake of its own economy and that of the Palestinians.

In the remarks, Yellen said she also urged Israeli Prime Minister Benjamin Netanyahu in a recent letter to reinstate work permits for Palestinians and reduce barriers to commerce within the West Bank.

"These actions are vital for the economic well-being of Palestinians and Israelis alike," Yellen said.

"We continue to explore options for strengthening the West Bank economy" following an executive order issued by President Joe Biden earlier this month, Yellen added.

Yellen said Washington supported the World Bank’s commitments to emergency food security assistance in Gaza and economic support for the West Bank, and other ongoing loan programs by regional development banks and the International Monetary Fund in neighboring Egypt and Jordan.

She said Washington had not seen a significant impact of the conflict on the global economy but would continue to monitor the situation closely.

She noted that Washington had also led efforts to counter the financing of Hamas and responded to Houthi attacks in the Red Sea.



The Worst Market Crashes Since 1929 

A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)
A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)
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The Worst Market Crashes Since 1929 

A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)
A screen displaying the closing Hang Seng Index at Central district, in Hong Kong, China, April 7, 2025. (Reuters)

Monday's stock market collapses in Asia and Europe after China retaliated to steep US tariffs revived memories of similar market turmoil after the Covid pandemic and the last global financial crisis.

Analysts called the falls "historic" and some even described it as a "bloodbath", recalling previous collapses since the start of the last century.

Global stocks crashed in March 2020 after the World Health Organization declared Covid-19 a pandemic, putting much of the world under lockdown.

On March 12, 2020 -- the day after the announcement -- Paris fell 12 percent, Madrid 14 percent and Milan 17 percent. London dropped 11 percent and New York 10 percent in the worst fall since 1987.

Further falls came over the following days, with US indexes dropping more than 12 percent.

The rapid response by national governments, which dug deep to keep their economies afloat, helped most markets rebound within months.

The 2008 global financial crisis was caused by bankers in the United States giving subprime mortgages to people on shaky financial footing and then selling them off as investments, fueling a housing boom.

When borrowers became unable to pay their mortgages, millions lost their homes, the stock market crashed and the banking system buckled, culminating with the dramatic bankruptcy of investment bank Lehman Brothers.

From January to October that year, the world's main stock markets fell between 30 and 50 percent.

The start of the millennium saw the deflation of the tech bubble caused by venture capitalists throwing money at unproven companies.

From a record 5,048.62 points on March 10, 2000, the US tech-heavy Nasdaq index lost 39.3 percent in value over the year.

Many internet startups went out of business.

Wall Street crashed on October 19, 1987, on the back of large US trade and budget deficits and interest rates hikes.

The Dow Jones index lost 22.6 percent, causing panic on markets worldwide.

October 24, 1929 became known as "Black Thursday" on Wall Street after a bull market imploded, causing the Dow Jones to lose more than 22 percent of its value at the start of trade.

Stocks recouped most lost ground during the day but the rot set in: October 28 and 29 also saw huge losses in a crisis that marked the beginning of the Great Depression in the United States and a global economic crisis.