G20 performance on macroeconomic policy

To reverse the trend of declining G20 performance on macroeconomic policy, leaders can make use of several catalysts, including increased deliberation and decision-making

Despite the centrality of macroeconomics to the G20’s mission, G20 performance on this subject has declined in recent years, notably in the leaders’ summit deliberation and decision-making. In order to contribute to the post-pandemic economic recovery and long-term global economic growth, the G20 must reverse this declining trend and bring macroeconomics back to the centre of its summit agenda.

Conclusions

Since 2008, the G20 has dedicated a substantial amount of attention to macroeconomic policy, as measured by the level and percentage of conclusions on macroeconomics in each summit’s communiqués. Overall, the G20 has dedicated 74,808 words to macroeconomics across all summits – an average of 4,400 words, or 31%, at each summit. Over time, G20 deliberation on macroeconomic policy experienced two main phases. In the first phase, deliberation increased from 18% of the words at the first G20 summit in Washington in 2008 to an all-time high of 54% at the 2014 Brisbane Summit. This phase was followed by a decline: at Antalya in 2015, deliberation dropped to 42%, and further to 29% at Hangzhou in 2016, 23% at Hamburg in 2017, 29% at Buenos Aires in 2018, and 22% at Osaka in 2019. There was a slight increase to 34% at the 2020 Riyadh Summit, but deliberation dropped again to 20% at the 2021 Rome Summit, and an all-time low of only 13% at the Bali Summit in 2022.

Commitments

Decision-making on macroeconomic policy has been generally strong, but has also declined recently. The G20 made a total of 508 public, collective, precise, future-oriented and politically binding commitments on macroeconomic policy, putting it first among all subjects. Overall, macroeconomic policy accounts for 16% of the total of 3,239 commitments made at the 17 summits from 2008 to 2022, again in two phases. From 2008 to 2012, G20 decision-making increased steadily to peak at 39% of all commitments at the 2012 Los Cabos Summit. Since 2013, decision-making on macroeconomics declined, sinking to an all-time low of 3% at the 2021 Rome Summit and rising a little to 8% at the 2022 Bali Summit.

Compliance

The G20 Research Group has assessed 37 macroeconomic commitments for compliance. Over time, G20 delivery on macroeconomics commitments has generally been strong, with compliance surpassing 81% on average, and well above the 71% overall average on all subjects. However, there were several dips, as compliance dropped to 68% for commitments made at the 2009 London Summit, 73% for Cannes in 2011, 70% for Brisbane in 2014 and 69% for Hangzhou in 2016. Compliance reached an all-time high of 95% compliance for Riyadh in 2020, but dropped to 83% for 2021 in Rome and, by April 2023, sank to 74% for the Bali Summit. By member, the top complier on macroeconomic policy was Canada, with an average of 96%, followed closely by Germany at 94% and Australia at 90%.

Causes and corrections

The G20’s relatively strong performance on delivering on its macroeconomic policy commitments can be partly attributed to particular text embedded in the commitment, such as references to ministerial meetings or timetables. Of the 37 assessed macroeconomic commitments, 11 contained at least one such catalyst. Although the mere presence of a catalyst does not correlate with higher compliance, the presence of several specific catalysts stands out as boosting compliance. Commitments that referred to a past G20 ministerial meeting averaged 91% compliance, compared to average compliance of 82% for those without this catalyst. Commitments that contained a specified target averaged 89% compliance, compared to 82% for those that did not. Commitments with a one-year timetable averaged 90% compliance compared to 81% for those without, and commitments with a multi-year timetable averaged 92% compliance, compared to 81% for those without this catalyst.

At the G20’s 18th summit in New Delhi, leaders should aim to increase their deliberation and decision-making on macroeconomic policy. They should also increase the specificity of their commitments by adding certain catalysts in the text of the commitment, notably precise targets, references to past ministerials, a one-year timetable or a multi-year timetable. These low-cost accountability measures could potentially reverse the recent decline in the G20’s otherwise strong performance in delivering on its macroeconomic commitments.