“We note that the likelihood of a soft landing in the global economy has increased,” said the draft communique dated Feb. 23, seen by Bloomberg News. “Risks to the global economic outlook are more balanced. Upside risks include faster-than expected disinflation.”

The text isn’t final and wording is subject to intensive negotiations in Sao Paulo, before the arrival of finance ministers on Wednesday. The G-20 gathering has already been marked by sharp divisions, especially over the wars in Ukraine and Gaza that are roiling global politics. The draft text refers to “conflicts in many regions of the world” among the challenges, without naming them, as well as “geoeconomic tensions.”

The statement reflects a relatively upbeat view of a global economy that’s struggled in recent years to overcome the impact of the pandemic, soaring inflation and a sharp increase in interest rates. 

“Inflation has receded in most economies, thanks in large part to appropriate monetary policies, the easing of supply chain bottlenecks” and moderating commodity prices, the G-20 draft said. It cautioned that there remains a danger of “adverse inflationary dynamics resulting in persistently tight financing conditions.”

‘Underpinned’ by America

The International Monetary Fund last month boosted its forecast for global economic growth in 2024 to 3.1%, citing a better-than-expected expansion in the US and fiscal support from China. 

At a press conference in Sao Paulo on Tuesday, Treasury Secretary Janet Yellen emphasized the US role, saying that “America’s path to a soft landing has underpinned global growth.”Play Video

Yellen acknowledged risks to the outlook including prolonged conflicts in Ukraine and the Middle East, which pushed commodity prices up and disrupted supply chains, and debt troubles plaguing low-income nations. She noted that “inflation has been coming down in many countries,” while stopping short of suggesting that interest-rate cuts might now be appropriate.

It’s on the language to describe military conflicts like Russia’s invasion of Ukraine, which has also hit economies worldwide, that the G-20 officials have struggled. The group includes Russia and China, as well as the US and Western allies. A preliminary session Monday saw a day of haggling over how to refer to the economic effects and risks of war.

Ministers are expected to try and bracket off some of the contentious topics in order to stop them from swamping other matters. Brazil, hosting the session in Sao Paulo’s iconic Bienal center amid lush parkland, is pushing an agenda that includes poverty, sustainable development, and the reform of global institutions. 

It’s unclear how much of that agenda will make through the meeting amid all the divisions. The final communique is typically where ministers outline their consensus view of the world economy and the challenges ahead.