In July 2025, finance ministers and central bank governors from the Group of 20 (G20) met in Durban, South Africa, to discuss the current state of the global economy. Their talks revealed growing concerns about rising global economic risks driven mainly by ongoing geopolitical tensions and increased U.S. tariffs. These factors are threatening the fragile recovery from the COVID-19 pandemic and casting a shadow over economic growth worldwide.
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What Are the Current Global Economic Risks?
The International Monetary Fund (IMF) recently lowered its global economic growth forecast for 2025 to 2.8%. This is well below the historical average growth rate of 3.7%. The slowdown is largely due to uncertainties around trade policies, weaker demand in key economies like the U.S. and China, and ongoing geopolitical conflicts.
Inflation rates, while expected to decrease, are still above comfortable levels. The IMF predicts inflation will ease to around 4.3% in 2025, but this decline is slower than initially hoped. Together, these factors signal a cautious outlook, highlighting the many global economic risks facing countries across the world.
Geopolitical Tensions: A Major Concern
The meeting highlighted how geopolitical tensions—especially the ongoing war in Ukraine and conflicts in the Middle East—are deepening economic uncertainties. Such conflicts disrupt trade routes and supply chains, push up energy prices, and make investors wary. This uncertainty has a ripple effect, hitting emerging markets and developing economies hardest by slowing growth and reducing investment.
The Impact of U.S. Tariffs on Global Trade
The U.S. has raised tariffs on imports from countries including China and the European Union. These tariffs act as barriers to trade, causing supply chain disruptions and increasing costs for businesses and consumers worldwide. Many companies have tried to accelerate purchases ahead of tariff hikes (known as “front-loading”), but this is not sustainable long-term.
The G20 finance leaders stressed the importance of working together to reduce these tariffs and restore a more stable, predictable global trade environment. Tackling these trade barriers is key to lowering global economic risks and supporting recovery.
What Can Be Done? Policy Recommendations from the G20
To address these challenges, the G20 leaders proposed several important steps:
- Reduce Trade Barriers: Countries should engage in dialogue to lower tariffs and promote open trade, which can boost economic growth.
- Adopt Responsible Fiscal Policies: Governments need to balance spending to encourage growth while avoiding high inflation and excessive debt.
- Protect Central Bank Independence: Central banks should be free to make decisions based on economic data without political interference, helping maintain financial stability.
- Support Emerging Markets: Providing financial assistance and debt relief to developing economies is critical for global economic resilience.
What Does This Mean for South Africa and Other Emerging Economies?
South Africa, along with other emerging markets, faces real risks from these global developments. These include possible capital outflows, currency instability, and higher borrowing costs. The G20’s focus on helping emerging economies is therefore essential. International cooperation can help South Africa navigate these challenges and build a more stable economic future.
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Staying Alert to Global Economic Risks
The G20 meeting in Durban highlighted that the world economy is at a delicate point. Geopolitical tensions and U.S. tariffs are significant sources of global economic risks that could slow growth and increase uncertainty for years to come.
For South Africans and other emerging economies, understanding these risks and following the policy recommendations from the G20 can help mitigate the impact and strengthen economic resilience.