BOSTON — As G20 leaders snake their way to Pittsburgh from all corners, they face very different circumstances from 12 months ago when the possibility of financial and economic catastrophe was all too real.
It's still ugly out there, of course, as millions of unemployed workers would glumly attest — from Britain to Canada, to Russia, South Africa and beyond.
But it is getting better.
America's $14 trillion economy is "very likely out of recession," according to U.S. Federal Reserve Chairman Ben Bernanke. Europe's two biggest economies — Germany and France — are growing again. Emerging powers China and India have resumed their rapid rises, while South America's economic giant Brazil has escaped the crisis, too.
So as G20 leaders haggle over the topics at hand in Pittsburgh — weighing additional stimulus measures, improving oversight of the global financial system, addressing the excesses of executive pay, boosting international trade, slowing global climate change — the economic landscape has, thankfully, changed for the better.
But don't be fooled by the return of relative calm to the G20 bloc. There will be blood. A meltdown of this magnitude claims many victims.
The question now is who will suffer the most from a crisis that swept from the casino canyons of Wall Street, to the smoke-choked factories of Guangdong, to the snowy peaks of the Andes. And, more importantly, what can be done about it? We heard one troubling hint last week from World Bank president Robert Zoellick: the poor. The World Bank predicts an additional 89 million people will be thrown into extreme poverty by the end of next year, defined as those subsisting on less than $1.25 a day. “The poor and most vulnerable are at greatest risk from economic shocks — families are pushed into poverty, health conditions deteriorate, school attendance declines and progress in other critical areas is stalled or reversed," Zoelick said upon release of the Sept. 16 report, which focused on the world's 43 poorest nations.
So why does this matter, you ask?
While low-income countries contribute less in terms of output than G20 nations, they play an increasingly important role in the global economy. And most have been severely damaged by the darkness of the past 12 months, as GlobalPost coverage of the meltdown has consistently shown.
For starters, a drop in global trade is very bad news for countries that supply the raw materials and relatively cheap labor that go into making stuff. The World Bank says global export demand will drop as much as 10 percent this year. That's a staggering amount that has already triggered nightmarish consequences, from the 20 million Chinese migrant workers who lost their jobs last year, to the thousands of Mexican and Canadian auto workers laid off amid Detroit's collapse, to the army of South African and Zambian miners thrown out of work when global demand for copper, platinum and other industrial metals dried up.
Beyond trade there's private investment — money that goes to finance schools, hospitals, roads and other infrastructure projects critical to developing economies. This too, is way down amid the crisis: the World Bank estimates that net private capital flows to the world's poorest countries will drop to $13 billion this year, or less than half the amount in 2007 as private investors keep more money in their pockets. Then there are the many indirect results of the world economic crisis, like a drop in tourism revenue, the threat of rising political instability and the important phenomenon of global remittances — money sent back to poor countries from immigrant workers living in the U.S. and other well-off nations. Remittance payments could fall by as much as 10 percent this year, as battered developed economies offer fewer opportunities for immigrant labor. That drop is already producing a disproportionately negative effect on low-income countries, which rely heavily on these outside sources of money to feed, clothe and educate their people.
So as you watch G20 leaders hash out the politics of economic policy in Pittsburgh, remember this truism made more stark by the global economic meltdown:
We are all connected now — the homeowner in Chicago who defaulted on his home loan; the heavily-leveraged banker in London who bet wrong on mortgage-backed financial instruments; the wandering Chinese factory worker; the hungry African miner; the lonely Mexican immigrant; the struggling Yemeni family that depends on a couple hundred dollars wired home each month from Brooklyn, Paris or Frankfurt; and, yes, even the poised and polished presidents and prime ministers whose wheeling and dealing could help decide the collective fate of every last one of us.