Need to Strengthen Multilateral Cooperation to Deal With Challenges Posed by Conflicts: FM

• Sitharaman said the fallout from conflicts and uncertainty falls disproportionately on developing countries.

• She called for resilient, diversified supply chains, especially for critical minerals, and greater use of recycling and urban mining.

• The finance minister said India remains largely outside the origin of global imbalances but still bears their spillover effects.

Finance Minister Nirmala Sitharaman on Thursday said the adverse impact of conflicts and uncertainty falls disproportionately on developing countries and the Global South, and there is a need for coordinated global action to deal with it.

Addressing the 'Global Convergence for Growth Summit', Sitharaman said there is a need to strengthen multilateral cooperation to build resilient economies, accelerate sustainable development, and ensure inclusive growth that benefits all.

In the Summit, leaders of advanced and emerging economies discussed ways of supporting a balanced growth anchored in an efficient global framework.

French President Emmanuel Macron presided over the Summit, which included top leadership from all the G7 nations, India, Brazil, China, Kenya, South Korea, and the IMF.

During her intervention at the Summit representing India, Sitharaman said, "In today's interconnected world, prosperity and challenges are shared, but the consequences of conflicts and uncertainty fall disproportionately on developing countries and the Global South.

"The situation demands coordinated global action. We must strengthen multilateral cooperation to build resilient economies, accelerate sustainable development, and ensure inclusive growth that benefits all," she said.

The finance minister stated that the recent developments have highlighted the importance of resilient, diversified and geographically distributed supply chains, particularly for critical minerals, and focus on circularity, recycling and urban mining can address some of the sourcing challenges being collectively faced by the world.

On the issue of global imbalances, the finance minister, in her virtual address, said some imbalances globally reflect differences in demographics, development stages, resource endowments, or economic structures.

"Our focus should, therefore, remain on excessive and persistent imbalances while recognising that the scale of domestic needs varies significantly across countries," Sitharaman said.

Stressing that the burden of adjustment should not fall disproportionately on countries that are not the drivers of these imbalances, Sitharaman said India, like many developing economies, remains largely peripheral to both the origination and propagation of global imbalances. "Yet, we continue to face their spillover effects." Highlighting India's economic progress, the minister said GDP growth is primarily domestic-demand led, with a largely market-determined exchange rate.

"India continues to be among the world's fastest-growing major economies, with GDP growth projected to remain robust at around 7% over the medium term," she said.

Sitharaman emphasised the need to strengthen confidence in multilateral institutions and ensure that they remain responsive to the needs of developing countries.

She called for better, bigger, more effective and more representative Multilateral Development Banks that can deliver significantly greater financing to developing countries and emerging economies, noting that enhancing their financing capacity, operational agility, and responsiveness will be critical.