It’s not yet glorious to be just rich

This month’s G20 summit reported fair progress on some of the most nettlesome challenges confronting the world economy, such as debt relief to low-income countries, restructuring multilateral funding agencies and securing finance commitments for climate change. G20 itself has become a more inclusive forum with the inclusion of the African Union (AU). Off agenda, trading infrastructure has been strengthened by an economic corridor linking Europe to India that offers an alternative to China’s Belt and Road Initiative (BRI), seen as spreading debt distress by eclipsing soft multilateral development credit. All in all, a rich haul of strong economic intent to build back better as the world emerges from the pandemic….

…Only that economic resolve remains subservient to political fault lines that are proliferating. G20, for all its economic heft, admits its inability to address trade fragmentation brought on by geopolitics. Apart from headline events like the Russia-Ukraine war, there is hardly any consensus over second-order effects like weaponising natural resources like oil or principal trading currencies like the dollar. Countries are left to their own devices over energy prices and international capital flows. Resurgent crude oil prices on extended production cuts by Opec+, which includes Russia, and reaction by Western central banks trying to tame inflation are the main vulnerabilities the global economy faces currently.

Closer home, diplomatic brinkmanship endangers India’s historically strong economic engagement with Canada that runs the gamut of food security, migration and ‘patient’ capital. Canada has become an unwitting frontline for India-Pakistan tension that threatens to delay a trade treaty, affect remittances by throttling intake of Indian students, and pull down Indian stocks in which Canadian pension funds have exposure. Politics is delivering economic triumphalism a reality check as the consensus over globalisation breaks down. Forging a common economic future is tougher as nationalism makes a strong comeback.