Developing nations face ‘hurricane’ of risks from inflation, rate hike, energy crisis: Indonesian minister
- G20 finance chief Sri Mulyani Indrawati said any resilience some countries may have won’t last long, and more economies will probably need IMF bailouts
- She added excluding Russia from the Bali G20 summit would risk a fragmentation of the global economy
Emerging and developing nations face a “hurricane” of risks from rising energy costs and food insecurity, and any resilience some countries may have won’t last long, the chair of the Group of 20 finance ministers forum said.
About 15 developing nations have dollar-denominated government bonds that pay at least 1,000 basis points more than US Treasuries, which is above the threshold for debt to be considered distressed, according to data compiled by Bloomberg. That’s double the number of countries from the start of the year.
Soaring US dollar sends Asian currencies reeling – but not Singapore’s
While some economies are showing resilience, that won’t last for long, and more nations will probably need to turn to the IMF for bailouts, Indrawati said. The fund last month approved the creation of a “food-shock window” of emergency financing to help meet countries’ needs.
Indrawati said she expects 2023 will be a “very, very difficult” for many economies, a vision that she shared in meetings with bond investors in New York and Boston in recent days.
Countries that today can’t get fertiliser will be facing food shortages in six months, just as winter a year from now is actually likely to be harsher than the coming winter in terms of rising energy prices.
Despite the economic whirlwind that they’re facing, many nations are stronger and more resilient than they were during past crises in 1997 and 2008, based upon stronger regulation, flexible exchange rates, a deeper market for debt denominated in local currency.
‘No safety net’ as Japan’s poorest face looming food shortage
“The true asset and the true value of the G20 is, regardless of what is happening today, the world will need this kind of cooperation, and this premiere economic forum like the G20 is worth continuing, maintaining and preserving,” she said.
His attendance will depend on the state of the conflict in Ukraine and other security matters amid recent developments, ambassador Lyudmila Vorobieva told reporters during a briefing in Jakarta.