G20 FWG meet in Kochi reaches broad agreement on transition pathways 

The Third G20 Framework Working Group meeting in Kochi had a broad agreement on the positive impact that the green transition can have on growth, primarily through increased investment in the long run.

However, given the uncertain pace of global transition and the recent supply shocks, V Anantha Nageswaran, Chief Economic Advisor, said there should also be cognizant of the potentially high fiscal costs that climate change and transition policies could entail, the adverse distributional impacts of transition policies and the shorter time-frame for implementation.

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For emerging market economies and low-income countries, it is also critical that while pursuing transition policies, they also need to account for their growth priorities. Therefore, they need enhanced access to low-cost financing and technology to enable the implementation of transition policies. These are some of the issues FWG is looking at under the climate change and transition pathway agenda, he told reporters here on Wednesday.

Macroeconomic issues

The meeting also discussed global macroeconomic issues and focuses on how international economic co-operation can be enhanced to achieve strong, sustainable, balanced and inclusive growth (SSBIG) of the global economy.

Detailed deliberations were held on the current global economic outlook based on presentations from international organisations such as the IMF and World Bank. The membership also shared their views on draft G20 reports on macroeconomic implications of food and energy insecurity and on the macroeconomic impact of climate change and transition pathways, he said.

High inflation

The surge in food and energy prices was one of the key factors underlying high inflation and the slowdown in global growth last year. Even though prices have moderated since then, the potential for further price volatility remains high, given the uncertainty in the global economy and geopolitical situation. Further, the inter-dependence of food and energy inflation results in higher energy prices, driving up the cost of food production and, eventually food prices.

The FWG is looking into trade-offs encountered by countries in dealing with food and energy insecurity amidst limited policy room while formulating policy responses, he said.

Risk evaluation

Taking cognizance of the increasing risk to global financial stability, there was also a dedicated session to understand different perspectives and evaluations of this risk, including recent stresses in the banking sector and their impacts on the global economy.

Answering a question whether FWG had discussed on the impact of US banking fallout on member countries, the CEA said most the countries have expressed the confidence that their individual country regulations and banking system are sound.

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