Emerging markets performing better than developed countries: Sanjeev Sanyal

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New Delhi: Emerging markets are performing much better than the developed world, but in the wake of economic revival, issues like inflation and fiscal stimulus withdrawal will have to be managed very carefully, Principal Economic Adviser to the Finance Ministry Sanjeev Sanyal said on April 9.

He also said that G20 in many ways kept the world going during the pandemic phase and many countries in the world will see a significant revival in GDP growth in the next few months.

Addressing virtually an event organised by the Research and Information System for Developing Countries, Sanyal also stressed the need to have a more fluid and flexible credit rating system.

The G20 (or Group of Twenty) is a forum for the governments and central bank governors from 19 countries and the European Union (EU).

“G20 is a grouping that in many ways kept the world going during COVID-19  pandemic. We will in the next few months, hopefully, see some economic recovery coming up… Many countries will see significant revival in GDP growth rates,” he said.

Sanyal said many emerging markets are doing much better than developed countries, and when economic revival happens then the emerging markets will do far better than the developed world.

“When this (economic revival) happens, then what happens to things like inflation, what happens to the withdrawal of fiscal stimulus? All these things will have to be managed very very carefully,” he stressed.

Expressing hope that G20 finance ministers and central bank governors will do what needs to be done to revive growth, Sanyal said there are some issues like debt servicing of poor countries remains.

On climate change, he said G20 countries need to do something about it. “But Paris (climate) commitments are related to Paris, bringing them into the G20 fold is very very tricky,” Sanyal opined.

Noting that G20 should not attempt things that are done in other forums, he said, “we (emerging economies) will be suspicious that this may be a way to create non-tariff barriers.” G20 members comprise Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK, and the US.

Collectively, the G20 economies account for nearly 90% of the gross world product, 80% of world trade, two-thirds of the global population, and approximately half of the world’s land area.