Regional Insights provides high-level takeaways from our global offices on key world events. Read on for insights from our teams in Indonesia, the US, China, Canada, the EU, the UK, MENA and Latin America.
G20 Summit Overview
Agung Yudha, President of EGA Indonesia, agung.yudha@edelmanega.com
Ana Saleh, Senior Vice President of EGA Indonesia, ana.saleh@edelmanega.com
“We met in Bali...at a time of unparalleled multidimensional crises. We have experienced the devastation brought by the Covid-19 pandemic, and other challenges including climate change, which has caused economic downturn, increased poverty, slowed global recovery, and hindered the achievement of the Sustainable Development Goals.”
- G20 Bali leaders' declaration
Amid tensions over the Russian missile explosion in Poland, world leaders met in Bali, Indonesia on November 15-16 for the G20, a gathering of the world’s major economies to provide policy coherence, analysis and practical tools to support growth and development.
Geopolitical conflict overshadowed the agenda. This year, Indonesia’s agenda focused on three pillars: Global Health Architecture, Sustainable Energy Transition, and Digital Transformation. But the agenda was overshadowed by the global post-pandemic struggle for recovery amid an array of geopolitical conflicts that have affected global food and energy supplies. Global media fueled low expectations for the summit and focused attention on bilateral meetings, rather than the summit itself.
Leaders still reached a consensus. Indonesia’s G20 presidency successfully brought leaders to consensus on the G20 Bali Leaders’ Declaration and agreed upon five important points:
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Staying agile and flexible in macro-economic policy responses and cooperation while continuing public investment and structural reforms, and promoting private investment and multilateral trade.
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Protecting macroeconomic and financial stability and remaining committed to using all available tools to strengthen financial resilience, promote sustainable finance and capital flow, and to reduce risks.
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Promoting food and energy security and market stability by providing temporary and targeted support to cushion the impact of rising prices and strengthening dialogue between producers and consumers.
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Catalyzing innovative financing and private investment in low- and middle-income countries to support the achievement of the Sustainable Development Goals (SDGs).
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Recommitting to accelerate achievement of the SDGs, achieving prosperity for all through sustainable development.
Leaders also reaffirmed commitments to tackle climate change. In the wake of COP27, they agreed to strengthen implementation of the Paris Agreement and urged developed countries to fulfil their commitments to jointly mobilize US$100 billion per year by 2020 and up to 2025.
The Leaders’ Declaration also spoke to the conflict in Ukraine:
“Most members strongly condemned the war in Ukraine and stressed it is causing immense human suffering and exacerbating existing fragilities in the global economy - constraining growth, increasing inflation, disrupting supply chains, heightening energy and food insecurity, and elevating financial stability risks. There were other views and different assessments of the situation and sanctions.”
Host President Joko Widodo said members had shown "flexibility."
Indonesia Key Takeaways
Under the theme “Recover Together, Recover Stronger,” President Joko Widodo focused efforts on the global agenda to strengthen global heath architecture, facilitate and finance the transition to a green economy, and accelerate digital economic transformation, as well as Widodo’s priority of food security. Beyond success in delivering the G20 Leaders’ Declaration, Indonesia’s key takeaways included:
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The Pandemic Reserve of US$1.5 billion that will serve as a catalyst to mobilize other funding for the health sector to deal with the threat of a pandemic crisis in the future.
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The establishment of a Resilience and Sustainability Trust (RST) by the International Monetary Fund (IMF) totaling $81.6 billion to help countries that are vulnerable to crises.
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The Just Energy Transition Partnership (JETP) led by the United States and Japan that raised $20 billion to support Indonesia’s energy transition program.
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Voluntary reduction of land degradation by up to 50%.
President Joko Widodo also co-hosted G20 leaders along with the US President Joe Biden, and European Commission President Von der Leyen to lead the commitment for the Partnership for Global Infrastructure and Investment (PGII) to accelerate investment in quality and transformative infrastructure in low- and middle-income countries. PGII partners will dedicate the fund to mobilize the private sector as drivers of quality global infrastructure and investment.
At the bilateral level, Indonesia managed to receive around $8 billion bilateral investment commitments from Japan and the US. Japan pledged a $927.4 million loan for Indonesia’s mass rapid transit system and tollway infrastructure projects. Another $500 million was committed to help Indonesia adopt renewable energy and expand grid networks under a public-private decarbonization initiative. Indonesia and the US launched a $698 million program of Indonesian Millennium Challenge Corporation (MCC) Compact. The fund aims to support the development of high-quality, climate-conscious transportation infrastructure in five provinces, mobilize international capital in support of Indonesia’s development goals, support coal plant decommissioning as part of the broader JETP program, and increase access to finance for Indonesia’s women-owned businesses and micro-, small-, and medium-sized enterprises.
What do clients need to be thinking about in the region:
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Focus on the sectors that have secured financial commitments. Commitments under the massive bilateral and multilateral agreements will continue to manifest, despite the political year ahead leading up to national elections in 2024. EGA can support information gathering on opportunities.
What to watch in follow-up:
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Green projects will receive a boost. In response to the Leaders’ Declaration, the G20 Action for Strong and Inclusive Recovery, and supporting action plans, we expect to witness the implementation of a number of green projects, such as the rainforest cooperation agreement signed jointly by the world’s largest rainforest nations, Indonesia, Brazil, and the Democratic Republic of Congo. In the short-term, the government’s key focus is preparing an investment plan for accelerating the closures of steam power plants. Once funding commitments materialize, Indonesia will prioritize the creation of green industries and reduce its reliance on exportation of agriculture and mining commodities. National policies are already in place to support the EV industry and the development of renewable energy resources, such as the almost 12,000 MW hydropower plant on Kalimantan island and the 23,000 MW plant in Papua province.
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Outcomes and plans from the G20 will be transformed into Indonesia’s ASEAN agenda, when it takes over the 2023 ASEAN Chairmanship.
United States Key Takeaways
Amy Morris, Senior Analyst for EGA US, amy.morris@edelmanega.com
“We are going to defend our allies, as well as American soil and American capacity."
– US President Joe Biden
Biden’s attendance of the G20 Summit was another sign that the US is back as a global player. From a US perspective, however, the G20’s main event was not the summit but Biden’s three-hour meeting with Chinese President Xi Jinping on Monday ahead of the summit, as well as the ballistic missile that North Korea fired on Thursday following the summit.
This was the pair’s first meeting since Biden took office, and since US House Speaker Nancy Pelosi visited Taiwan in August, which prompted Beijing to halt formal talks on climate change and military-to-military activity. Amid smiles and handshakes, Biden and Xi agreed to resume bilateral talks on climate change, economic stability, and health and food security. Secretary of State Antony Blinken will travel to China in February for follow up discussions — suggesting a slight warming of ties.
But both sides were frank on Taiwan and North Korea. In his statement following the discussion, Xi was clear that Taiwan is “the first red line that must not be crossed in China-U.S. relations.” Biden intentionally warned Xi that the US would have greater activity in the region to defend its allies South Korea and Japan from North Korea, putting the US in China’s face — though not directed against it.
The meeting may initiate a slight thaw in relations, but the fundamental sources of conflict in the relationship remain unresolved. Tensions over Taiwan, 301 tariffs, and human rights violations will unfortunately continue.
The US and Europe made the war in Ukraine their top priority, but countries outside of the G7 were not so aligned. In their remarks to the summit, Biden and other G7 leaders criticized Russian aggression and decried the war in Ukraine. Even more poignant, the summit’s multilateral joint statement further condemned the war (see G20 Summit Overview) — an impressive feat considering Russia was present along with China and India, both of whom have stopped short of criticizing the war outright. However, the statement also acknowledged that “there were other views and different assessments” and that the G20 is “not the forum to resolve security issues.”
The US also announced new partnerships and programs. Under the banner of the Just Energy Transition Partnership (JETP), the US announced a US$20 billion plan with international partners to aid Indonesia’s transition from coal-fired electricity toward sustainable resources. The US, Indonesia and EU also announced the Partnership for Global Infrastructure and Investment (PGII) to accelerate investment in quality infrastructure in low- and middle-income countries around the world and strengthen the global economy — a potential counter to China’s Belt and Road Initiative if at large scale.
What do clients need to be thinking about in the region:
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Keep apprised of new legislative developments and rules on trade with the US. Biden will leverage US trade to change behavior. He has reengaged America on the international stage, but he is not afraid to ruffle feathers, particularly with China. He is determined to move production of advanced technologies back to US shores, case in point being the Inflation Reduction Act and CHIPS and Science Act.
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Keep monitoring trade tensions between US and China. 301 tariffs are not going away, even with November’s extension of the exclusions, and the Uyghur Forced Labor Prevention Act (UFLPA) is still in place.
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Heightened defensive US military presence around Taiwan and North Korea could affect supply chains.
What to watch in follow-up:
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Blinken’s Beijing visit in early 2023. Will talks make concrete progress or stall out?
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Continuing developments around Taiwan. Biden does not believe Chinese military action against Taiwan is imminent, but it will be important to watch. With Democrats in control of the Senate, they may choose to take up the Taiwan Policy Act which, if passed, would not make Beijing happy.
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Increased US military activity around North Korea. DPRK only launched a ballistic missile, not the 7th nuclear test, but Biden’s words have set the stage for more military movement in China’s backyard.
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Implementation of the Partnership for Global Infrastructure and Investment (PGII). It could mean new business and development opportunities in key developing countries.
China Key Takeaways
Han Huang, Senior Vice President of EGA China, huang.han@edelmanega.com
Yona Yang, Senior Program Manager, yona.yang@edelmanega.com
“Suppression and containment will only strengthen the will and boost the morale of the Chinese people.”
— President Xi Jinping
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Xi’s meetings with major powers were a sign that China is looking to ease diplomatic rifts with the West. However, major red lines for China like Taiwan and global issues like the Ukraine war may hamper these efforts.
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The resumption of bilateral talks between the U.S. and China on climate, economic stability and food and safety are wins for the bilateral relationship and globally.
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China’s post-Covid reopening efforts will be rocky but show promise for the Chinese economy and the international community’s business interests.
On November 14, Presidents Xi and Biden met for the first time in person since Biden assumed the presidency. China’s official readout described the three-hour meeting as “candid, in-depth and constructive,” and Chinese Foreign Minister Wang Yi told the press the meeting had achieved its intended purpose.
Taiwan was a major agenda item during the talks. Xi stressed that the Taiwan question is “at the very core of China’s core interests” and that it is “the first red line that must not be crossed in China-US relations.”
Xi also highlighted the benefits of economic integration for both countries but warned Biden against efforts to curb Chinese development, saying that “suppression and containment will only strengthen the will and boost the morale of the Chinese people.”
As a result of the Xi-Biden meeting, the US and China resumed formal climate talks that had been suspended following Speaker Pelosi’s visit to Taiwan. Special Climate Envoy Xie Zhenhua told COP27 participants that China’s methane plan has been completed and is pending approval, representing a successful deliverable under the US-China declaration on climate action made at COP26.
President Xi also met with Australian Prime Minister Anthony Albanese — a breakthrough after years of top-level silence indicating tensions between China and Australia are beginning to ease.
While the reboot of China-Australia talks is promising, real progress will take time — Xi did not immediately commit to lifting trade sanctions but said the two sides should “explore ways to steer the relationship back onto the right track.”
China continues to carefully manage its position on the Ukraine war, not explicitly endorsing or condemning the Russian invasion. However, China’s official announcement of the G20 declaration did articulate, for the first time, that it is an invasion by Russia against Ukraine and demanded Russia’s complete and unconditional withdrawal from the territory of Ukraine. China’s version of the G20 declaration, however, said that G20 leaders “deeply regret” (“痛惜”) the war in Ukraine, while other countries’ versions used the term “condemn” (“谴责”).
What do clients need to be thinking about in the region:
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Global ESG investment has grown rapidly in China. Despite zero-Covid restrictions, ESG growth stems from government promotion of green transition and green finance opportunities. Business opportunities will continue to surface in cutting-edge green technologies, including biotechnology, carbon capture, utilization and storage (CCUS) technology, high-end equipment and new energy vehicles.
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China seems to be relaxing its Covid policies. While implementation of the “20 Measures” — the country’s latest protocols to guide officials on the ground on Covid-19 controls — will be staggered and slow, a key piece to a successful shift in strategy will be vaccine development and promotion. Biotech companies will have more opportunities for investment as a result.
What to watch in follow-up:
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U.S.-China talks on climate change, economic stability, and health and food security. Will we see concrete outcomes as a result of the talks or will bilateral red lines stall progress?
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China-Australia trade relations. Before heavy-handed trade restrictions were imposed by China, Australia profited by selling wine, lobster, and barley among other products to China. It remains to be seen if a renewed dialogue will lead to more normalized economic relations between the two countries.
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The global recession. How China will work with G20 members — who account for 80% of the global economic output and nearly 75% of exports — to tame inflation and avoid a global recession.
Canada Key Takeaways
Darcy Walsh, President of EGA Canada, darcy.walsh@edelmanega.com
Canada’s goals are aligned with international goals. As this week’s global summit concludes, the international community’s objectives are notably aligned to the political objectives of Canada’s federal government, with a focus on preparation for pandemic scenarios, a strong condemnation of Russia’s invasion of Ukraine. Also, in line with Canada’s Digital Ambition 2022, Connectivity Goals, and Digital Adoption Program, the subject of digital transformation was a focus of this year’s summit in Indonesia and will remain a priority into the next G20 presidency. International collaboration and universal connectivity were identified as essential to ensure a global digital transformation.
Trudeau commits funding for vaccines and infrastructure. Prime Minister Justin Trudeau has committed to providing funding to ensure vaccine production for developing nations, as well as infrastructure commitments amounting to CAD 750 million for projects throughout Asia — marking Canada’s largest commitment from this week’s summit.
Canada eyes critical minerals supply chains. Importantly for the Canadian domestic political environment is Indonesia’s proposal to establish a nickel producer block among G20 nations, closely aligned with Canadian federal and provincial objectives to become a major contributor to critical minerals supply chains in North America and with Canadian economic partners.
The relationship with China is evolving. A stain on Canada’s engagement during the summit was tension that arose between Chinese and Canadian leadership following the Canadian publication of details of discussions between the two leaders. This awkward scenario comes among increasing tension between the two nations, including a recent warning from Canada’s foreign minister about Canadian companies doing business with Chinese companies. Crucially, Canada just released its long-awaited Indo-Pacific strategy, which moves to increase alignment with Japan and South Korea, and defines an evolving relationship with China.
EU Key Takeaways
Markus Poole, Program Manager for EGA Brussels, markus.poole@edelmanega.com
The Russian invasion of Ukraine and the subsequent energy crisis continues to overshadow all other topics, from climate to China. EU members sought international support from G20 members and allies for their position on Russia, and sought to build ties to diversify energy sources and build the trade links necessary to offset high energy prices and inflation.
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European Union Commission President Ursula von der Leyen explained, “Europe has decided to completely diversify away from the Russian fossil fuels and we want to leapfrog to clean energy. We need this clean energy. Not only to have it home-grown but also to import it.”
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German Chancellor Olaf Scholz also focused on Russia, explaining that it was good the G20 found “clear language” to condemn Russia’s invasion. “The Russian president is almost alone in the world with his policy,” he stressed.
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Spanish President Pedro Sánchez also condemned Russia and highlighted that “the food and energy crises created by the conflict in Ukraine are having devastating economic, social and developmental effects around the world…The world simply cannot afford it.”
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Meanwhile, Italian Prime Minister Giorgia Meloni criticized energy “speculators” for having too much influence and called for a reform to the world energy sector to prevent countries from weaponizing energy. Italy seeks to develop a plan to be Europe’s energy hub.
China was also a topic of concern for European Union leaders. A planned meeting between European Council President Charles Michel and Xi Jinping was shelved after Beijing cancelled a pre-recorded speech by Michel for a Shanghai trade expo in which he condemned Russia’s war of aggression. Nonetheless, French President Macron spoke positively about Xi, calling him a “sincere” figure who should “play the role of a mediator over the next few months” in stopping further Russian aggression against Ukraine.
What do clients need to be thinking about in the region?
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Companies should consider how the extreme focus on Russia and the energy crisis could distract from other critical problems. Many topics are being ignored because most EU members do not have the focus or financial bandwidth to deal with many issues, unless energy related.
What to watch in follow-up:
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Will EU arguments succeed in convincing more countries to increase pressure on Russia to end the war?
UK Key Takeaways
Simon Finkelstein, Senior Vice President of EGA UK, simon.finkelstein@edelmanega.com
Rishi Sunak seemed to restore the UK’s international reputation. At his first major international summit as Prime Minister, Sunak appeared at ease and credible on the world stage, ensuring that the UK is still an influential voice on key global challenges, despite the economic crisis caused by the Truss Government. It was the first time he met many key allies and world leaders, including a vital bilateral with Joe Biden.
Sunak showed leadership on Ukraine. Summit coverage was dominated by the missile strike in Poland and Sunak’s response suggests he will continue Boris Johnson’s strong leadership on the Ukraine war and leading opinion in NATO on response, alongside the US.
Sunak also showcased the UK’s commitment to stepping up activity in the Indo-Pacific, partly as a way of combating China. Sunak’s comments ahead of the summit seemed to indicate a conciliatory tone toward China, notably failing to describe China as a “threat,” which has gone down badly with China ‘hawks’ in Parliament. Cancellation of the Sunak-Xi bilateral was also notable, given the lack of UK-China leader-leader dialogue for a long time.
What do clients need to be thinking about in the region:
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Clients in the region will be interested that Sunak indicated slowing the process on a UK-India FTA and accession to CPTPP. Instead of arbitrary deadlines, which reduce UK leverage, he will take a longer-term view with the aim of extracting as much benefit for UK business and agriculture as possible. There will be opportunities to engage with the government on this more considered approach.
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Also of interest will be the government’s continuing focus on the Indo-Pacific, which it sees as the growth market of the future and will be keen to work with business and investors to boost UK representation in the region.
What to watch in follow-up:
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The UK will be watching closely to see the NATO response to the missile strikes in Poland and whether the Biden-Xi bilateral improves lines of communication between the West and China.
MENA Key Takeaways
Nivine Afiouni, Vice President at EGA MENA, nivine.afiouni@edelmanega.com
“[The UAE] strongly supports the G20 process to address shared challenges and encourage a more balanced and sustainable global economic recovery.”
— UAE Minister of State Ahmed Ali al-Sayegh
Only two Arab countries participated in the G20: the Kingdom of Saudi Arabia, as a G20 member, and the United Arab Emirates, as a guest.
Saudi Crown Prince and Prime Minister, Prince Mohammed Bin Salman Al Saud led the Saudi delegation. The Saudi Fund for Development (SFD) funded 12 development projects and programs in Indonesia worth over US$401.6 million, including in transport, communications, agriculture, infrastructure, shipping, health, and education, in addition to signing a bilateral energy agreement. Saudi companies and consultants are encouraged to launch their own international development projects in Asia with the help of the Saudi Fund for Development.
Saudi Arabia will also donate $50 million to the global Pandemic Fund that launched at the G20.
UAE president Sheikh Mohammed bin Zayed Al Nahyan attended the summit. As a non-member participant, UAE wanted to enhance cooperation with member states and position the UAE as a dynamic and fast-growing economy. Several MOUs were announced between UAE and Indonesia, including on climate action for COP28 and on cybersecurity. Israeli tech and cybersecurity have become a leading investment interest for the UAE since it and Israel signed the Abraham Accords in September 2020. MOUs were also signed between Abu Dhabi National Oil Company (ADNOC) and Kilang Pertamina International in the petrochemical sector, and between Masdar (Abu Dhabi) and the Indonesian Investment Authority and Pertamina Power Indonesia on renewable energy and storage.
Saudi’s Public Investment Fund (PIF) is competing with UAE’s Abu Dhabi Investment Authority (ADIA), which tops the list of sovereign wealth funds. The SFD announcement of $401.6 million came weeks after PIF announced plans to invest $24 billion in the MENA region. Saudi and UAE investments will focus on healthcare, energy, infrastructure development and technology.
What do clients need to be thinking about in the region:
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Watch for incentives provided by the Indonesian government for Emirati and Saudi investors, especially in infrastructure, energy, and food security.
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Global companies with operations in the UAE or Saudi Arabia may be interested in joint investment opportunities with UAE and Saudi companies on projects in Indonesia.
Latin America Key Takeaways
Diana Sedano, Senior Analyst for EGA Latin America, diana.sedano@edelman.com
Nicolas Cediel, Analyst for EGA Latin America, nicolas.cediel@edelman.com
“In the northern hemisphere the death traders negotiate lethal weapons, but in the southern hemisphere food becomes more expensive or is lacking, and what ends up killing are not bullets or missiles but poverty and hunger.”
— Santiago Cafiero, Argentinian foreign affairs minister
All Latin American member countries expressed their concerns on the war in Ukraine, inflation, debt restructuring, and food and energy insecurity. Argentina, Brazil, and Mexico were part of the G20 summit. President Alberto Fernandez from Argentina participated in Bali while heads of State in Brazil and Mexico sent their ministers of foreign affairs.
Latin American leaders agreed to strengthen diplomatic channels to resolve conflict, to work together to mitigate the impact of food and energy insecurity, and to accelerate transformation towards sustainable and resilient agriculture and food systems and supply chains.
Leaders reaffirmed their commitments to the Paris Agreement and its temperature goal, and urged developed countries to fulfil their commitments to mobilize US$100 billion per year by 2020 and up to 2025.
Leaders also voiced concerns about the “deteriorating” debt situation of some middle-income countries, the potential for huge capital outflows if aggressive U.S. rate increases continue, and the consequences of the pandemic. They demanded equitable access to vaccines for low- and middle-income countries.
What do clients need to be thinking about in the region:
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Governments will reinforce commitments to the development of programs around environmental commitments.
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Energy and food will have a major impact on companies' operations; supply chain difficulties would affect prices and consumption levels.
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Latin American countries can play a key role as suppliers of clean energy, food and strategic minerals and in the development of value chains associated with these sectors.
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It is important to understand the national and international environments unique to each country in order to better navigate the uncertainty.
What to watch in follow-up:
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Coordination of international actions to resolve the conflict in Ukraine.
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Actions and measures to mitigate the security and energy situations and their impact on emerging economies.
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Opportunity for regional alignment in Latin America in fulfilling environmental objectives, energy security and cooperation initiatives.
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Election of the IDB/BID presidency.