G20 financial leaders said on Friday the global economy was likely heading for a “soft landing”, but warned wars and escalating conflicts could endanger this outlook, while more global cooperation could make growth stronger.

In a joint communique after a two-day meeting in Brazil, finance ministers and central bankers from the Group of 20 major economies also committed to resist protectionism in trade and stressed the need to reduce economic inequalities.

Last month, the World Bank forecast that the global economy would avoid a third consecutive decline in growth since a major post-pandemic jump in 2021, with 2024 growth stabilising at 2.6 per cent, in line with 2023, but warned that overall output would remain well below pre-pandemic levels through 2026.

“We are encouraged by the increasing likelihood of a soft landing of the global economy, although multiple challenges remain,” the communique said. “Downside risks include wars and escalating conflicts,” it said.

By avoiding explicit mention of the conflicts in Ukraine and Gaza, diplomats have worked to sidestep the disagreements between Russia and major Western nations that derailed a consensus at the finance chiefs’ gathering in February.

To defuse the disagreement, Brazil drafted a chair statement on geopolitical issues, stressing that these matters will be addressed by G20 leaders in November.

“The G20 made a wise decision to put geopolitical issues in their place to allow the cooperation agenda to move forward,” Brazil Finance Minister Fernando Haddad told a news conference.

Haddad also hailed the group’s first-ever declaration calling for cooperation to effectively tax the world’s largest fortunes, although that separate joint statement papered over disagreements about the right forum to advance the agenda.

The G20 communique said economic activity had proved to be more resilient than expected in many parts of the world, but the recovery had been highly uneven across countries, contributing to the risk of economic divergence.

The document flagged risks to the economic outlook that remain broadly balanced, with more economic cooperation, faster-than-expected disinflation and technological innovations, like the safe development of Artificial Intelligence (AI), cited among upside risks.

But at the same AI tech could also turn out to be a downside risk to growth, the document said, along with economic fragmentation and persistent inflation keeping interest rates higher for longer, extreme weather events, and excessive debt.

Climate change and significant loss of biodiversity were key topics of concern, the G20 financial leaders agreed, warning that if poorer nations had to shoulder more of the cost of fighting climate change, it would make global inequality worse.

“We reiterate the understanding that the cost of inaction is greater than the cost of action,” the communique said.

The document also stepped-up language calling for a reform of the International Monetary Fund, that would give emerging and developing economies a bigger say in the lender of last resort.

The G20 communique underlined the “urgency and importance of realignment in quota shares to better reflect members’ relative positions in the world economy.”

The first-ever joint declaration by G20 finance leaders vowing to cooperate on effectively taxing the world’s largest fortunes on Friday papered over deeper disagreement about the right forum to advance the agenda.

Finance ministers and central bankers from the Group of 20 major economies agreed to reference fair taxation of “ultra-high-net-worth individuals” in both their joint communique and a separate declaration on international tax cooperation on Friday.

“We will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed,” said the final draft of the G20 ministerial declaration in Rio de Janeiro, seen by Reuters.

However, fault lines have already emerged about whether to do that in talks at the United Nations or via the organisation for Economic Cooperation and Development (OECD), a group of wealthier democracies founded by US and European allies.

US Treasury Secretary Janet Yellen told Reuters on the sidelines of the G20 meeting that she believes the OECD, which shepherded negotiations for a global two-part corporate tax deal for the past three years, is better placed to handle such talks.

“We don’t want to see this shifted to the UN,” Yellen said, adding that the OECD “is a consensus-based organisation. We’ve made a huge amount of progress, and the UN doesn’t have the technical expertise to do this.”

Major developing nations have already bristled at that approach, according to an official familiar with the matter, who said Brazil should use its G20 presidency to advance discussion at both the UN and OECD.

Some of the most vocal advocates of a global minimum tax on billionaires, including Nobel laureate Joseph Stiglitz, insisted that the UN was the proper forum for global tax cooperation.

“We call on G20 leaders to align with the progress being made at the UN and establish a truly democratic process for setting global standards on taxing the ultra-rich,” said Oxfam International’s Tax Policy Lead Susana Ruiz.

“Entrusting this task to the OECD - the club of mostly rich countries - would simply not be good enough,” she added.

Brazilian Finance Ministry official Guilherme Mello, said that the UN Framework Convention on International Tax Cooperation represented a victory for the developing nations of the “Global South” who seek a venue where they are better represented, as most countries are not members of the OECD.

Still, Mello recognized both the OECD and the UN as legitimate forums, and he said an ongoing discussion of how to effectively tax the super-rich is progress, whatever the forum.

“The shape this will take depends on many dialogues that will be held,” he added.

Some observers remained skeptical about the chances for a global “billionaire tax” targeting the world’s largest fortunes.

European officials pointed out that not even the 27-nation European Union has power of taxation as a bloc. Although France lent early support to a global minimum wealth tax, Germans have offered stiff resistance.

“It seems that it might be very difficult to bring this forward,” said one European official at the G20 meetings.

Japan sees the reaffirmation in the latest G20 joint communique of existing commitments against excessive foreign exchange volatility as one of the major achievements, Finance Minister Shunichi Suzuki said on Friday.

“We believe there were major achievements at G20, such as the inclusion of the reaffirmed foreign exchange commitments in the joint communique,” Suzuki said, speaking at a press conference after the Group of Twenty (G20) finance ministers and central bank governors meeting in Rio de Janeiro.

The commitments say the G20 major economies recognise that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability.

In the same press conference, Japan’s top currency diplomat Masato Kanda said that Japan pushed for the inclusion of the commitments in the communique as their absence “could give a misleading message to the market.”

While a weak yen gives exports a boost, it has become a source of concern for policymakers by pushing up the cost of imports and hurting consumption.

The yen rallied sharply this week, rebounding from 38-year lows hit earlier this month, as market participants unwound their long-held bets against the currency ahead of a Bank of Japan (BOJ) meeting next week.

Some politicians have recently called on the BOJ to offer more clarity on its rate hike plan partly to prevent the yen from testing fresh lows against the dollar.