Leaders of world's biggest economies and a representative of the European Union will meet in Buenos Aires, Argentina on Friday and Saturday as part of the Group of 20 summit.
The G20 began in 1999 as a meeting of Finance Ministers and Central Bank Governors in the wake of the Asian financial crisis and was first held in Berlin, Germany. The G20 summit was established in 2008 amidst the world financial crisis and included heads of state and government. Since then, G20 members have been meeting annually to discuss a wide range of issues related to economic and financial cooperation.
It aims to “strengthen the resilience of the global financial system” and to ensure all financial markets are properly regulated and supervised.
The G20 is not a permanent institution with a headquarters, offices, or staff. Instead, its leadership rotates on an annual basis among its members, its decisions are made by consensus, and implementation of its agenda depends on the political will of the individual states.
G20 members account for over 80% of the world's gross domestic product (GDP), nearly 75% of all global trade, and they host almost two-thirds of the world's population.
"The Buenos Aires meeting is taking place 10 years after the first G20 Leaders' Summit in Washington DC, when heads of State and Government from around the world put together an action plan to address the 2008 financial crisis" the G20 website states.
This year, all eyes will be on a range of issues, including a high-stakes meeting between US President Donald Trump and his Chinese counterpart Xi Jinping as markets have been unnerved by an evolving trade conflict between the world's two largest economies.
Rising import tariffs between the US and China are already having an impact on growth projections for 2018-2020.
The IMF's World Economic Outlook report published in October estimated that global growth in 2018 would reach 3.7 percent, the same as the previous year but lower than the 3.9 percent it had forecast in July. It also slashed its outlook this year for 19 countries, including several eurozone member states and emerging markets.
It marked down US growth by 0.2 percentage point to 2.5 per cent, and China by a similar margin to 6.2 per cent.
The report said if trade disruptions persist, fallout would become more serious in 2020 with global growth projected to be down by 0.8 per cent, and with it US and China growth down significantly.
International Monetary Fund (IMF) Chairwoman Christine Lagarde in a blog post warned the upcoming G20 gathering that "the global economy faces a critical juncture".
"We have had a good stretch of solid growth by historical standards, but now we are facing a period where significant risks are materializing and darker clouds are looming," she said. "Rising trade barriers are ultimately self-defeating for all involved. Thus, it is imperative that all countries steer clear of new trade barriers, while reversing recent tariffs," she added.
Trade wars have consequences, including risks of a global recession.
Protests are also expected in the lead-up to the annual meeting. In last year's summit in Hamburg, Germany, protesters clashed with police, torching cars, and smashing shops.
Banks, markets and government offices will be closed in Buenos Aires on Friday.
(G20 Family Photo: Alexander Nemenov/AFP via Getty Images)
World financial markets will take their lead next week from the outcome of talks between Trump and Xi. Trump said on Friday there were some good signs for the talks with China ahead of his meeting with Xi. "We will see what happens," the US president stated as he was meeting Japanese Prime Minister Shinzo Abe.
During the G20 event, the United States, Mexico and Canada signed a revised U.S.-Mexico-Canada trade pact to replace the North American Free Trade Agreement. "Just signed one of the most important, and largest, Trade Deals in U.S. and World History. The United States, Mexico and Canada worked so well together in crafting this great document. The terrible NAFTA will soon be gone. The USMCA will be fantastic for all!" Trump tweeted.
(U.S. President Donald Trump and Chinese President Xi Jinping AP- Pablo Martinez Monsivais)
Trump, Xi agree trade war ceasefire
China and the United States agreed to a temporary truce on trade Saturday after a highly anticipated meeting between US President Donald Trump and Chinese President Xi Jinping during the G20 summit.
Following two-and-a-half hours of discussion, Trump agreed to leave the tariffs on $200 billion worth of Chinese goods at the 10% rate, and not raise it to 25% at this time ahead of a January 1 deadline, according to a White House statement.
In exchange, China agreed it was willing to purchase a "very substantial" amount of agricultural, energy, industrial, and other goods from the United States to reduce the trade imbalance between the two countries.
The leaders of the world's two largest economies also agreed to immediately begin negotiations on top US concerns related to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, the White House said. Both parties agreed to complete negotiations within 90 days but if they fail to reach a deal, then the 10 percent tariffs will be raised to 25 percent.
G20 leaders back reform of world trade body
All G-20 leaders called for reforms to the World Trade Organisation in a final statement from the two-day gathering in Argentina.
"We recognise the contribution that the multilateral trading system has made," the statement read. "The system is currently falling short of its objectives and there is room for improvement.
"We therefore support the necessary reform of the WTO to improve its functioning. We will review progress at our next Summit," it said.
The issue will be discussed during the group’s next summit in Osaka, Japan, in June.
Meanwhile, financial markets will be cheered by the announcement that Trump and Xi Jinping agreed.