'Biggest challenge' to global economy comes from war in Ukraine, says Yellen

The “greatest challenge” for the global economy comes from the war in Ukraine, according to Yellen


US Treasury Secretary Janet Yellen on Thursday said the “greatest challenge” to the global economy came from the war in Ukraine, ahead of a G20 ministerial meeting in Indonesia. 

“Our biggest challenge comes from the war that Russia has started” in Ukraine, she said during a press conference on the Indonesian island of Bali.

“We see repercussions of this war in all corners of the world, particularly with regard to energy prices, and the rise of food insecurity”.

“The international community must have a clear vision how to hold Putin to account for the global economic and humanitarian consequences of this war,” she stressed.

The war in Ukraine since February 24 has shaken world markets, accentuated inflation, and aggravated a food and energy crisis that threatens to destabilize the most vulnerable countries.

Joe Biden's minister is in Bali, Indonesia, to participate in the meeting of finance ministers and central bank governors on July 15-16.

She has indicated that she wants to continue to pressure her G20 counterparts for a cap on Russian oil prices, in order to deprive Moscow of the financing necessary to continue the war and at the same time limit inflation.

“A price cap is one of our most powerful instruments,” she said, as it would “deprive Putin of the revenue his war machine needs.”

The official said says it hopes India and China will join the initiative as it will “serve their own interests” by minimizing hydrocarbon prices for consumers around the world.

'No place' for the Russians

Another objective of the G20 meeting will be to encourage major creditor countries, including China, to finalize a debt reduction agreement for poor countries, noted Janet Yellen, citing the example of Sri Lanka's bankrupt economy.

“Clearly, Sri Lanka is not capable of repaying its debt and I hope that China will be ready to help work with Sri Lanka to restructure its debt.”

On form, the official stressed that “representatives of Putin's regime should have no place at this forum.”

But she declined to comment on whether Western countries might boycott Russian officials and walk out of the meeting, as they had at a previous G20 finance leaders meeting in April.

“It can't be + business as usual +”, she explained, “but I can tell you that I will express my opinion on the Russian invasion in the strongest possible way, (…) speak of its impact on Ukraine and condemn it”.

And “I expect that many colleagues will do the same”.

Global outlook clouded

Russian Finance Minister Anton Siluanov should attend the meeting virtually this time, and have a deputy on site, according to Indonesian organizers.

Last week the head of Russian diplomacy Sergey Lavrov came in person to a meeting of his G20 counterparts but had to face a round of accusations about the war and left the meeting in the middle of the day.


Janet Yellen's remarks come a day after the International Monetary Fund warned of a “darkening” global economic outlook.

The financial institution is expected to again this month lower its growth forecasts “for 2022 and 2023,” after lowering them in April, IMF Managing Director Kristalina Georgieva said.

In a note, the IMF warns that the higher than expected rise in inflation could “ignite social tensions”.

The “greatest challenge” to the global economy comes from the war in Ukraine, according to Yellen

The “greatest challenge” to the global economy comes from the war in Ukraine , according to Yellen

Russia and Ukraine nevertheless made progress on Wednesday on the issue of blocking grain exports from Ukrainian ports, with Turkey announcing further discussions on the subject next week.

UN Secretary-General Antonio Guterres, who said he hoped a “formal agreement” could be reached soon, spoke of “a glimmer of 'hope' for those suffering from hunger.

On the sidelines of the meeting, 11 Asian countries, including Indonesia, India, Hong Kong and Singapore, signed a “Bali Declaration” , under the aegis of the OECD to pledge to strengthen tax transparency between their economies.

OECD Secretary-General Mathias Cormann hailed the signatories' “clear political commitment”. es by estimating that states in the region are currently losing some $25 billion in tax revenue per year to offshore assets.