Why the G7 still matters to the global economy – OpEd – Eurasia Review
By Cornélia Meyer *
When the leaders of the G7 countries first met in 1973, their combined economies accounted for about 65% of the world’s gross domestic product (GDP). With the rise of China and other emerging countries, they now represent around 40% of global GDP and around 10% of the world’s population. In 2018, the group represented 60% of the world’s wealth. Compare that to the G20 – which includes China, India, South Africa and Saudi Arabia – which accounts for 90% of global GDP, between 75% and 80% of global trade, and two-thirds of the world’s population.
Why then is the G7 still important? First, its members are democracies that share a multitude of values. Second, the group is a good way to assess the state of the world. Third, member countries come up with important initiatives which can then be further developed by the G20. The communiqué, at the very least, demonstrates a consensus of a large and very wealthy group of nations.
Last weekend’s summit in St. Ives showed all of the above. It was the first face-to-face meeting of world leaders since the outbreak of the coronavirus disease (COVID-19) pandemic.
The meeting addressed the biggest issues of our time: the COVID-19 pandemic, rebuilding the global economy after its worst recession since World War II, climate change and a myriad of other social and economic issues like global taxation for the world’s biggest. businesses and equal access to education.
The summit aimed to rebuild better, in a more sustainable, fairer and more equitable way, as its host, British Prime Minister Boris Johnson, never tires of pointing out.
The leaders stressed that they would continue to support their economies for as long as needed, beyond the $ 12 trillion in stimulus they had already disbursed, in stark contrast to calls for austerity afterwards. the 2008/2009 financial crisis.
As always, when you have multiple parties to a dialogue, not everyone gets everything they want. While the statement said the G7 would deliver 1 billion doses of COVID-19 vaccines to the developing world, what was pledged at the meeting missed more than 300 million doses. It’s also far less than the 11 billion doses that the World Health Organization estimates it will take to immunize the world.
On the climate, the press release did not respect the commitment of the G7 environment ministers, who stipulated a timetable for the gradual shutdown of coal-fired power stations. Instead, leaders reiterated the 1.5 ° C limit on global warming, meeting the targets of net zero until 2050 by halving collective emissions over the next two decades and “supporting a revolution.” green ”.
On Saturday evening, Prince Charles made a passionate appeal for business and politics to come up with a global response to the climate crisis, similar to what we have seen during the pandemic. By the way: while the climate enthusiasm among the leadership was evident, the number of private planes rightly needed to bring delegations to St. Ives and the awe-inspiring flight over the Red Arrows had a whiff of “do what I am.” say, but not like I do. “
It was inevitable that the leaders approach their relations with China, considering the ground they had lost in economic terms since 1973. US President Joe Biden has a more nuanced approach to the Middle Kingdom than his predecessor Donald Trump. Yet he sees China as one of the main threats on the world stage. EU leaders share concerns about emerging Chinese dominance in supply chains and Beijing’s human rights record. However, for some of them like Germany, China constitutes its second export market just behind the United States. This explains the reluctance of some Europeans to make bold statements. They are also less wary of the Belt and Road infrastructure project, as they too benefit from shorter land links with China. This prompted German Chancellor Angela Merkel to declare that the task force set up to boost infrastructure was aimed less at being against something (China’s Belt and Road Initiative) than for something, referring to its emphasis. on sustainability. French President Emmanuel Macron stressed that the G7 as a group was not “hostile to China”.
Overall, no leader got everything they wanted, but all got pretty good. What emerged was that the United States was once again ready to engage with its peers.
On the contrary, the benefit of the meeting has been for some of the richest democracies in the world to establish a common denominator which will serve as a solid basis for their positioning in the G20 next month, which is important for the global economy.
• Cornelia Meyer is a PhD economist with 30 years of experience in investment banking and industry. She is President and CEO of the business consultancy firm Meyer Resources.