Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. The most important steering group for the global economy is starting to go off the rails. Wednesday’s walkout by U.S., European and Canadian officials in protest over Russia’s participation in a Group of 20 meeting — while many others, including China and India, remained — laid bare the deep fissures among its members over the war in Ukraine. Tension among the Group of 20 major economies isn’t new. And the decision by Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and a number of their counterparts wasn’t a surprise — Yellen had made clear the U.S. would skip some meetings if Russian officials were allowed to attend. Still, the move underscored how difficult it will be for the world’s biggest economies to come together to confront major global challenges, including elevated inflation, rising interest rates, slower growth and food insecurity — and of course, the consequences of the war. “The forum has been struggling to find consensus for the past decade or so after its heyday in the 2008/2009 global financial crisis, when it really did serve as the steering group and brought the world together to restore growth and avoid protectionism and stabilize the financial system,” said Matthew Goodman, senior vice president for economics at the Center for Strategic and International Studies, who served as a deputy sherpa to the G-20 during the Obama administration. “Those days are long gone,” Goodman said. “Really since 2010, it’s struggled to find its way.” That couldn’t come at a worse time for the global economy, he added. The International Monetary Fund on Tuesday projected global growth of 3.6 percent in 2022 and 2023 — down 0.8 and 0.2 percentage point, respectively, from its January forecast. And it warned that the war in Ukraine will “severely” set back the global recovery from Covid-19. Goodman said the G-20 is needed more than ever to help coordinate the response, not only in developed nations such as the U.S., U.K., Germany, Canada and Japan, but in large emerging market economies, such as China, India and Brazil. “The fact that the G-20 is not going to be able to do that is a real problem for the world,” he said. “And there’s really no alternative. The UN is too big and too amorphous and doesn’t really focus on global economic issues.” The World Bank and International Monetary Fund, meanwhile, are much bigger organizations and tend to be slower moving. The big question now is whether the G-20 leaders will be able to come together in the fall. President Joe Biden has called for Russia to be removed from the group. Indonesia, which chairs the G-20 this year and will host the leaders gathering in Bali, decided to keep Russia on the guest list for this week’s finance ministers and central bank governors meeting, despite objections from some members. “There is a strong condemnation regarding the war in Ukraine by Russia, but all members essentially underlined the need for all of us to continue maintaining G-20 cooperation and the importance of multilateralism,” Indonesian Finance Minister Sri Mulyani Indrawati said at a press conference following the meeting. “I’m confident that this will not erode the cooperation as well as the role of the G-20 forum,” she added. White House Press Secretary Jen Psaki, asked about Yellen’s walkout, said the president and the Treasury chief have said that “we can’t have business as usual” at the G-20 and other international forums. She didn’t say whether Biden may respond similarly if President Vladimir Putin shows up in Bali this fall. “I can’t make a prediction of what actions he may or may not take,” Psaki said, “but certainly we support her steps and it's an indication of the fact that President Putin and Russia has become a pariah on the global stage.” IT’S THURSDAY — Get the popcorn ready: Fed Chair Jay Powell will make his last remarks this afternoon before the central bank’s blackout period begins ahead of its May 3-4 policy meeting. Will we get another unusually blunt assessment of the Fed’s likely path, or something a bit more typically cryptic? Let us know what you think: kdavidson@politico.com or @katedavidson, or aweaver@politico.com or @aubreeeweaver.
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