Connect with us

Economics

How can global trust in the global economic order be restored ?

The global debt-to-GDP ratio has grown beyond expectations since the 2007–08 global financial crisis, and governments will struggle to pay off the interest

Avatar

Published

on

The global financial system is in a frail state. Global debt reached a record high of US$233 trillion in the third quarter of 2017.

The global debt-to-GDP ratio has grown beyond expectations since the 2007–08 global financial crisis, and governments will struggle to pay off the interest.

While a full-blown debt crisis has not materialised, the vulnerabilities are apparent.

To make matters worse, the stock market suddenly began to turn southwards in February 2018, signalling continued market volatility globally. Investors are now bracing themselves for rising inflation and interest rates.

For the average worker who is at risk of losing their job or their pension, the frailty, uncertainty and unsustainability of the current economic system is deeply concerning. The post-crisis years have been marked by rising levels of global wealth inequality and youth unemployment.

Living in the age of the Fourth Industrial Revolution, workers face unprecedented job insecurity. Employment has become uncertain across various sectors as technological developments threaten to take over the workforce.

This is the case even for the well-educated or the highly qualified. As long as someone’s work can be codified, whether it is manual-based or knowledge-based, their job is at risk of being taken over by computers and robots in the future.

The end of World War II heralded in a new age of globalisation

Under the leadership of the United States and the United Kingdom, the Bretton Woods agreement and the development of global institutions such as the General Agreement on Tariffs and Trade (later the World Trade Organization), the International Monetary Fund (IMF) and the World Bank set the stage for a new economic order.

Despite occasional hiccups, this economic system has generated wealth and led to peace and poverty eradication for most parts of the OECD and for many emergent economies in Asia.

But since the global financial crisis, prolonged and unsettling socio-economic woes have eroded confidence in the post-war system and its international institutions.

Developing economies are moving away from a reliance on IMF funding towards the creation and use of alternative, regional funding sources.

Even the developed West, including the United States and the United Kingdom, has increasingly lost trust and hope in the world order they were responsible for creating. Western democratic governments have started to lose their bearings and become more inward looking.

Fears of job competition, terrorism and erosion of local identity bases have led to a surge in right-wing nationalist, populist and xenophobic sentiments.

How can this global trust deficit be overcome and confidence in the global economic order restored?

The decline of the West has been accompanied by China’s re-emergence as a world economic power. According to the IMF, China overtook the United States as the world’s largest economy in 2014, producing 17 per cent of the world’s GDP when adjusting for purchasing power parity compared to the United States’ 16 per cent.

Could China rise up to lead the global economic order into a new economic paradigm? This possibility has been echoed within China itself, especially during the recent 19th Communist Party Congress. During his opening speech, Chinese President Xi Jinping voiced China’s commitment to international cooperation and global economic integration, and announced that it was time for China to take on a global leadership role as part of China’s plan to make the ‘Chinese Dream’ a reality.

But there seems to be a feeling of unease about the idea of a China-led world order, particularly from Western intellectuals and media outlets. Many are wary of the incompatibility of the current Chinese political system and ‘Western’ liberal democratic ideals.

Given the current atmosphere of distrust in globalisation and the international world order, China will need to begin offering some assurances to the world that the Chinese model of economic growth and development could potentially provide a new ‘safe harbour’.

The United States’ recent imposition of tariffs on steel and aluminium imports heightens the risk of the world descending into protectionism and trade wars. This is an opportune moment for China to try to provide some economic stability and decrease global tensions. One way it could do so is by accelerating its ‘21st century Maritime Silk Road’ component of the Belt and Road Initiative.

In Southeast Asia, China could expedite port and shipping development to promote trade and connectivity. This enhanced connectivity could also act as an incentive for ASEAN+6 countries to conclude the Regional Comprehensive Economic Partnership

Authors: Christopher H Lim and Tan Ming Hui, RSIS
Source link

Continue Reading
Advertisement
Comments

Economics

ADB Trims Southeast Asia’s growth forecast to 4.4%

Southeast Asia’s growth forecast is revised down slightly to 4.4% for 2019, as economic weakening in Singapore and Thailand prompts downward adjustments to their growth forecasts

Asian Development Bank

Published

on

 The Asian Development Bank (ADB) has trimmed its forecasts for economic growth in developing Asia this year and next year as growth in the People’s Republic of China (PRC) and India is weighed down by both external and domestic factors.

(more…)

Continue Reading

Economics

Thai economy continued to be on a decelerating trend (Bank of Thailand)

The Thai economy continued to be on a decelerating trend in October, although private consumption indicators expanded and foreign tourist arrivals continued to expand.

Avatar

Published

on

iStock-1144933955.jpg

According to Bot latest Press Release, the Thai economy continued to be on a decelerating trend in October. The value of merchandise exports continued to contract, mainly due to the economic slowdown of trading partners, consistent with deterioration in manufacturing production and private investment indicators.

(more…)

Continue Reading

Economics

Thai Cabinet approves new economic stimulus measures

The Thai government has rolled out new stimulus measures intended to boost full-year economic growth to 2.8%

Boris Sullivan

Published

on

The Thai Cabinet today approved three new stimulus packages to prop up the softening economy, said Finance Minister Uttama Savanayana.

(more…)

Continue Reading

Most Read

Upcoming Events

Jan 23

12th World Congress on Alzheimers Disease & Dementia

January 23, 2020 @ 9:00 am - January 24, 2020 @ 5:00 pm BMT
Feb 12

Future Energy Asia

February 12, 2020 - February 14, 2020
BITEC
Bangkok
Feb 19

13th World Congress on Nursing and Health Care

February 19, 2020 @ 9:00 am - February 20, 2020 @ 5:00 pm BMT
Phuket
Phuket city
Mar 11

Food science conferences

March 11, 2020 @ 8:00 am - March 12, 2020 @ 5:00 pm BMT
Mar 11

Food science conferences

March 11, 2020 @ 9:00 am - March 12, 2020 @ 5:00 pm BMT

Press Release

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 11,937 other subscribers

Trending