(Bloomberg) -- The Group of 20 finance chiefs warned that risks to the global economy will likely continue into next year and called for coordinated responses from policymakers.

“The world is in a dangerous condition,” Finance Minister Sri Mulyani Indrawati of Indonesia, the current G-20 host nation, told reporters in Washington on Thursday, summing up discussions following a meeting of finance ministers and central bankers. 

“We are now facing increasing and compounding risk, high inflation, weak growth, energy and food insecurity or crisis, climate risk and geopolitical fragmentation,” she said, speaking alongside Bank Indonesia Governor Perry Warjiyo. She also warned of an increasing risk of recession.

Global fiscal and monetary chiefs have converged on the US capital this week amid warnings the world economy is sliding toward recession as Russia’s war in Ukraine continues to add to high energy and food prices and China’s economy slows, and as central banks raise interest rates to cool inflation. 

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The G-20 representatives are also gathering as part of the broader International Monetary Fund annual meetings, focused on global challenges such as persistent inflation, record debt that emerging developing nations are struggling to service, climate change and food security.  

The Federal Reserve’s most aggressive monetary tightening since the early 1980s has sent the US currency surging, impacting developing countries that borrowed heavily in greenbacks and raising the cost of dollar-priced energy and food imports. That, in turn, has placed further pressure on many central banks, and triggered a wave of interest-rate increases aimed at curbing the jump in consumer prices.

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Policymakers in the world’s largest economies need to be “very mindful about the potential spillover effects for other countries,” Indrawati said. 

“The room to maneuver is becoming so narrow, or even now has been eliminated, so the trade-off is becoming so painful,” she said. “We have to take a painful step in order for us to be able to restore the stability and recovery of the economy.”

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G-20 members -- which represent about 85% of the global economy -- made the following pledges, according to Indrawati: 

  • Strengthening coordination on issues that are critically important for global economic stability and prosperity, including the food and energy crisis
  • More commitment to ensuring the long-term resilience of international financial architecture, especially when so many low- and middle-income nations are in debt distress amid high interest rates. The G-20 will keep working to ensure the implementation of the Common Framework -- which brings the Paris Club of traditional rich debtor countries together with China to try to restructure the debts of low-income countries on a case-by-case basis
  • Making more progress on financial-sector regulation and supervision, especially with the proliferation of crypto assets
  • Advancing climate investment and revitalizing infrastructure in a “sustainable, inclusive and affordable way”
  • Reaffirming commitment to implementing the international tax package

At similar meetings in April, officials from countries including the US walked out when a Russian attendee began speaking in protest over the war. There was no overall communique issued either, given the lack of consensus.

(Updates with more comment from Indrawati in seventh paragraph.)

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