Coronavirus: Global situation

Variants threaten global recovery, G-20 warns

VENICE • An upsurge in new coronavirus variants and poor access to vaccines in developing countries threaten global economic recovery, finance ministers of the world's 20 largest economies warned.

The Group of 20 (G-20) gathering in the Italian city of Venice on Saturday was the ministers' first face-to-face meeting since the start of the pandemic. Decisions at the meeting include the endorsement of new rules aimed at stopping multinationals from shifting profits to low-tax havens.

That paves the way for G-20 leaders to finalise a new global minimum corporate tax rate of 15 per cent at a Rome summit in October, a move that could recoup hundreds of billions of dollars for public treasuries straining under the Covid-19 crisis.

A final communique said the global economic outlook had improved since G-20 talks in April, thanks to the roll-out of vaccines and economic support packages, but acknowledged its fragility in the face of variants like the fast-spreading Delta.

"The recovery is characterised by great divergences across and within countries and remains exposed to downside risks, in particular the spread of new variants of the Covid-19 virus and different paces of vaccination," it read.

While G-20 nations promised to use all policy tools to combat Covid-19, the Italian hosts of the meeting said there was also agreement to avoid imposing new restrictions on people.

"We all agree we should avoid introducing again any restriction on the movement of citizens and the way of life of people," said Italian Economy Minister Daniele Franco, whose country now holds the rotating G-20 presidency.

The communique, while stressing support for equitable global sharing of vaccines, did not propose concrete measures, merely acknowledging a recommendation for US$50 billion (S$67.6 billion) in new vaccine financing by the International Monetary Fund (IMF), World Bank, World Health Organisation (WHO) and World Trade Organisation.

Differences in vaccination levels between the world's rich and poor remain vast. WHO director-general Tedros Adhanom Ghebreyesus has called the divergence a "moral outrage" that also undermines wider efforts to tame the spread of the virus.

While some of the wealthiest countries have now given more than two-thirds of their citizens at least one dose of vaccine, that figure falls to well below 5 per cent for many African nations.

Italy said the G-20 would return to the issue of vaccine funding for poor countries ahead of a Rome summit in October and that new variants were an area that needed to be looked at. It did not give further details.

"We must agree on a process for everyone on the planet to be able to access vaccines. If we don't, the IMF predicts that the global economy will lose US$9 trillion," religious development organisation Jubilee USA Network said.

It was referring to an IMF forecast that international cooperation on Covid-19 vaccines could speed up world economic recovery and add US$9 trillion to global income by 2025.

IMF managing director Kristalina Georgieva said the world was facing "a worsening two-track recovery" partly driven by vaccine-availability differences.

The biggest policy initiative at the talks was a well-flagged agreement on the global corporate tax rate, capping eight years of wrangling on the issue.

G-20 members account for more than 80 per cent of world gross domestic product, 75 per cent of global trade and 60 per cent of the population of the planet, including big-hitters the United States, Japan, Britain, France, Germany and India.

Among other sticking points, a fight in the US Congress over President Joe Biden's planned tax increases on corporations and wealthy Americans could cause problems, as could a separate European Union plan for a digital levy on tech companies.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 12, 2021, with the headline 'Variants threaten global recovery, G-20 warns'. Subscribe