May 22, 2022
IMF chief Kristalina Georgieva said that people in rich and poor countries would suffer if decades of globalisation are reversed. But is anybody paying attention?
Reversing decades of globalization has already initiated by “rich countries” few years ago:
US President Trump pulled out of the Paris Climate Agreement, WHO, TPP immediately after he took office in 2017. US President Biden rejoined Paris Climate Agreement and WHO after he took office in 2021. But damages on globalization momentum are obvious. President Biden also initiated “exclusive clubs”, by his invitation only: AUKUS, IPEF, and other regional “summits.”
The tragic Ukraine war, now entering fourth month, further accelerates the pace of de-globalization: “And since the war in Ukraine started, our monitoring indicates that around 30 countries have restricted trade in food, energy, and other key commodities.” There is no one person or party focused on ending the Ukraine war, so “dark days” are ahead! Sadly, people in poor countries would suffer most!
Now EU nations are putting up plan with US$300B to get rid of Russian fossil energy as soon as possible. Unfortunately, EU nations are rushing to sign LNG deals with global suppliers. It is obvious Climate Change, de-carbonization, are on the back burners now.
The risk of “the world could split into two economic blocs that may put an end to globalization” is real and dangerous! But Russia is already out of the SWIFT system and joined China’s Union Pay system. Does Russia have any recourse, except a full surrender?
It is a great proposal: Ms Georgieva has proposed strengthening the global system by lowering trade barriers, create new timelines for clearing debt, create a new worldwide digital payment platform and make a greater effort to tackle climate change. The reality is that the Ukraine war has fundamentally changed the geopolitics or global system. Before the score is settled with an ending of Ukraine war, there is no chance any “strengthening the global system” will take place. Major powers are hardly in talking terms!
Economic gloom will worsen if Ukraine war causes globalisation to reverse, IMF warns
The Telegraph: Ben Woods Sun, May 22, 2022, 1:46 PM
Global economic misery will deepen if the world divides into distinct geopolitical blocks in light of Russia’s invasion of Ukraine.
In a blog, she warned that business leaders were descending on Davos at a time when the global economy was confronting its biggest test since the Second World War.
She said the world was facing a “confluence of calamities” caused by the pandemic, high food and energy prices, tightening financial conditions, disruption to supply chains and the threat of climate change.
“Tensions over trade, technology standards, and security have been growing for many years, undermining growth—and trust in the current global economic system,” she added.
“Uncertainty around trade policies alone reduced global gross domestic product in 2019 by nearly 1pc, according to IMF research.
“The costs of further disintegration would be enormous across countries.
“And people at every income level would be hurt—from highly-paid professionals and middle-income factory workers who export, to low-paid workers who depend on food imports to survive.
“More people will embark on perilous journeys to seek opportunity elsewhere.”
There are fears that China and Russia could create a financial system to rival the West after Russian banks were ejected from the Swift global payments messaging system and China’s UnionPay helped the Kremlin after Visa and MasterCard suspended operations in the nation.
Fragmentation also risks creating two different technology standards and reserve currencies, which have the potential to cause a permanent that could harm global growth.
Ms Georgieva has proposed strengthening the global system by lowering trade barriers, create new timelines for clearing debt, create a new worldwide digital payment platform and make a greater effort to tackle climate change.
She added: “Over the past three decades, flows of capital, goods, services, and people have transformed our world, helped by the spread of new technologies and ideas.
“These forces of integration have boosted productivity and living standards, tripling the size of the global economy and lifting 1.3 billion people out of extreme poverty. But the successes of integration have also brought complacency.
“There is no silver bullet to address the most destructive forms of fragmentation,” she added. “But by working with all stakeholders on urgent common concerns, we can begin to weave a stronger, more inclusive global economy.”