The third G20 finance leaders and central bank governors meeting kicks off on the Indonesian island of Bali on Friday against the turbulent backdrop of war in Ukraine, soaring inflation and global food shortages.

The previous G20 finance leaders’ meeting in Washington, DC, in April ended without the release of a communique and saw officials from the United States, the United Kingdom, France, Canada and Ukraine walk out of talks to protest the presence of Russian representatives.

On Friday, Indonesian Finance Minister Sri Mulyani Indrawati called on participants to reach a consensus during the talks for the sake of low-income countries facing soaring food and energy prices.

“We are acutely aware that the cost of our failure to work together is more than we can afford,” she said. “The humanitarian consequences for the world and especially for many low income countries would be catastrophic.”

For host country Indonesia, the latest summit holds extra significance as a temperature check of Indonesian President Joko “Jokowi” Widodo’s “peace mission” to Kyiv and Moscow at the beginning of July – a trip that divided critics at home and overseas.

Angelo Abil Wijaya, the head of project management and research at Y20 Indonesia, the official youth engagement group for the G20 Leaders Summit, said Indonesia is hoping to foster dialogue between Russia and Ukraine, which is expected to attend the meeting virtually following Jakarta’s invitation.

“Basically, with the presence of Russia and Ukraine in the Finance Ministers and Central Bank Governors [FMCBG] Meeting, Indonesia as the host continues to strive to make the G20 a forum that bridges dialogue between countries,” Wijaya told Al Jazeera.

“The presence of these parties at the FMCBG is also in line with and consistent with Indonesia’s efforts to make the G20 a success this year, including through President Jokowi’s peace mission visits to Ukraine and Russia some time ago.”

During his Russia-Ukraine trip, Widodo pushed to revive export channels for grains and edible oils, including rapeseed oil and sunflower oil, which have languished at Ukrainian ports since the start of the conflict – causing global shortages and the prices of other oils such as Indonesian palm oil to skyrocket.

Indonesian President Joko "Jokowi" Widodo shakes hands with Ukrainian President Volodymyr Zelenskyy

“Jokowi’s visits to Ukraine and Russia, which are active conflict zones, need to be appreciated,” Athiqah Nur Alami, the head of the Political Research Center at the Indonesian National Research and Innovation Agency (BRIN), told Al Jazeera.

“Jokowi was trying to show Indonesia’s concern for ending the conflict and achieving dialogue between the two countries. However, this visit cannot be separated from Indonesia’s national interests related to the G20 presidency and food security issues.”

Wempi Saputra, Indonesia’s assistant minister of finance has said the talks in Bali will focus on the global food crisis and fertiliser shortages that are affecting farmers.

Other topics of discussion will include regulation of cryptocurrency and other digital currencies, the establishment of a World Bank fund for pandemic research and preparedness, and plans to create a Resilience and Sustainability Trust through the International Monetary Fund that will provide funds to countries in need of debt relief and other financial aid.

The meeting, which ends on Saturday, comes as soaring prices and uncertain economic conditions have become a pressing concern.

During a bilateral meeting in Japan on Tuesday, United States Treasury Secretary Janet Yellen and Japanese Finance Minister Shunichi Suzuki warned that the war in Ukraine is exacerbating global food security issues and heightening the risk of a global recession.

In Bali on Friday, Yellen reiterated her condemnation of the war and accused Russian finance officials in attendance of sharing responsibility for its “horrific consequences”.

In Indonesia, inflation in June hit 4.35 percent year-on-year – an increase blamed on a combination of factors including the conflict, supply chain disruptions, and strong consumer demand following the COVID-19 pandemic.

The Indonesian government has also started to raise the prices of state-regulated products such as electricity and gas.

Police stand in front of banners of the G20 summit near a venue for the G20 Finance Ministers Meeting in Nusa Dua on Indonesia's resort island of Bali.

Deni Friawan, an economic researcher at the Centre for Strategic and International Studies, said Indonesia is facing the growing threat of “stagflation,” a combination of high inflation and meagre economic growth.

“In fact, there is no easy way out of the problem, which is dominated by supply-side shocks stemming from this rise in global commodity prices,” Friawan told Al Jazeera, adding that policymakers may need to tolerate inflation rising to a certain level while ensuring it does not go out of control.

Friawan said that discussions about monetary policy at the summit would also need to take into account a potential weakening of currencies globally as the US Federal Reserve rolls back quantitative easing and raises interest rates.

“Learning from the mistakes of the Fed, which was late in raising interest rates, banks should immediately start raising benchmark interest rates in order to avoid capital flight and depreciation of currency exchange rates which could increase inflationary pressure from imported goods or imported inflation,” he said.

Friawan added that the finance ministers’ meeting would need to identify opportunities for growth amid the rocky global context, which Indonesia in particular will be looking for as the hosts.

“Inflation isn’t always bad. In fact, a low and controlled increase in the price of goods and services is necessary for the economy to operate in a healthy manner,” he said.

“When consumers expect that prices will rise in the future, they will shop and this encourages producers to produce more goods, employ additional labour and increase investment which ultimately encourages continued economic growth.” (Al Jazeera)

•PHOTO: The third G20 finance leaders and central bank governors meeting is taking place against the turbulent backdrop of war in Ukraine, soaring inflation and global food shortages [Made Nagi/Pool via Reuters]

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