Alicia Garcia Herrero, Natixis Asia Pacific Chief Economist, Bruegel Senior Fellow
The meeting of the seven largest developed economies in the world, the seemingly omnipotent G7, just concluded proceedings in Biarritz under the French presidency. Notwithstanding Emmanuel Macron’s attempt to climb the ranks of world leadership, the reality is that not much has been achieved at this summit, if at all. In fact, although Macron has pushed Trump to discuss the matter of Iran, the reality is that not much has changed. In the same vein, Trump has not even bothered to seek the support of his main allies in his crusade against China’s economic policies, but rather quite the contrary. In fact, while G7 leaders were gathering in Bearritz, the U.S. administration announced new unilateral trade measures against China.
As if all this were not enough to continue weakening the G7, after being beaten with the entry and exist of Russia in the past (from G7 to G8 to G7), and the creation of a more relevant G20 group to accommodate large emerging economies, Trump’s parting shots at Canadian Prime Minister Justin Trudeau after leaving last year’s summit in Quebec has certainly raised doubts about the usefulness of G7 meetings altogether. The next summit is due to be in the U.S. during an election year, so it will be interesting to see how it plays out.
The most serious issue is that there was no worse time for the G7 to stop carrying out its core functions, namely coordinating key economic policies. In fact, economic problems are becoming increasingly global and less national as a result of the rapid process of globalization experienced in the last few decades. From climate change to the acceleration of technological change, not to mention migration and China’s impact on the global economy, global challenges extend beyond each country’s borders no matter how big, and thus require coordination. If these major issues cannot be coordinated, and soon maybe not even be discussed, there is no doubt that the effects of globalization on the world can only end up being worse than they would have been with coordination. Therefore, the agony of a group like the G7 should worry us all.