Global economy November 2023-

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Peterson Institute for International Economics (PIIE)
Bretton Woods institutions under geopolitical fragmentation

‘Capitalism is dead. Now we have something much worse’: Yanis Varoufakis on extremism, Starmer, and the tyranny of big tech (24 September 2023)
Brace for Elections: 40 Countries Are Voting in 2024
Prepare for major policy changes and rising geopolitical friction everywhere from Washington, DC, to Taiwan.
(Bloomberg) The world economy is lumbering from one shock to another as brutal wars, stubborn inflation and high borrowing costs pockmark the post-pandemic recovery. The next source of turbulence: a packed 2024 election calendar. The year will bring 40 national elections — a busy lineup even in calmer political times. (1 November 2023)

Don’t Count on a Soft Landing for the Global Economy
Kenneth Rogoff
Despite analysts’ increasingly optimistic forecasts for the coming year, the risks to global growth are still tilted to the downside. In fact, recent developments in China, Europe, and the United States suggest that the world economy’s biggest challenges may lie ahead.

26 January
A New Economic-Policy Agenda for Asia
Hoe Ee Khor and Runchana Pongsaparn
…pandemic-era policies must now be unwound against a backdrop of slower GDP growth, higher inflation, and increased debt.
During the pandemic, ASEAN+3 governments went all in to support their economies, not least by monetizing fiscal deficits – a taboo in normal times. The unprecedented fiscal stimulus they pursued – including large amounts of direct assistance to households and firms, from cash handouts to fuel subsidies – was accompanied by large interest-rate cuts. … Governments also pursued policies like debt moratoria and regulatory forbearance. In the post-pandemic era, these measures are excessive, imprudent, and unsustainable.
… ASEAN+3 policymakers must also address longer-term structural challenges. … Some countries might need infrastructure development, labor-market reforms, industrial policies, regulatory changes, and a concerted effort to boost foreign direct investment and trade. The ASEAN+3 countries should waste no time preparing for the formidable challenges they face. The outlook for the global economy depends on their success.

Davos Week 15-19 January
This week, over 2,800 leaders convened under the theme, Rebuilding Trust, to contribute to progress on four themes:
• Achieving Security and Cooperation in a Fractured World
• Creating Growth and Jobs for a New Era
• Artificial Intelligence as a Driving Force for the Economy and Society
• A Long-Term Strategy for Climate, Nature and Energy

20 January
AI’s impact on jobs could lead to global unrest, warns AI expert Marietje Schaake
The 2024 World Economic Forum in Davos was dominated by conversations about AI and its potential as well as possible pitfalls for society. GZERO’s Tony Maciulis spoke to former European Union parliamentarian Marietje Schaake about the current regulatory landscape, a recent report from the International Monetary Fund (IMF) saying as many as 40% of jobs globally could be lost or impacted by AI, and how that might give rise to unrest as we head into a critical year of elections.
Different views: Altman’s​ optimism vs. IMF’s caution
Much of the buzz in Davos this year has been around artificial intelligence and the attendance of precocious talents like Open AI’s Sam Altman, who has helped pioneer the biggest technological breakthrough since the personal computer. The World Economic Forum’s Chief Economists Outlook suggested near unanimity in the belief that productivity gains from AI will become economically significant in the next five years in high-income economies. And Altman himself has said he is motivated to “create tech-driven prosperity.”
But there are less rosy predictions around AI. The International Monetary Fund has warned that 40% of jobs worldwide could be adversely impacted and overall inequality could worsen. In the current feverish climate, such warnings have been dismissed.
19 January
WEF Press Release: Annual Meeting 2024: Rebuilding Trust Amid Uncertainty

Davos 2024: 4 things to know
1. Leaders need to ‘pull together’
Global cooperation and security – António Guterres warned on Wednesday, we mustn’t allow geopolitical divides to prevent global responses to global challenges, like climate change or AI, as he called for reforms to global governance systems.
2. ‘Projections are not destiny’
A new model for growth
Multiple factors, but also risks, will shape the global economy in 2024.
Consumption, trade patterns, debt, whether inflation will continue to cool, as well as geopolitical risks and fragmentation, were all on the table in our Global Economic Outlook.
3. ‘Humans are going to have better tools’
AI: Opportunities and challenges
Ensuring work forces of the future are prepared and able to take advantage of all that AI offers will be essential as well, as Julie Sweet told us in our Generative AI: Steam Engine of the Fourth Industrial Revolution? on Tuesday.
As Hadi Partovi stressed, we need to teach AI tools to everyone, so they don’t lose out to someone who understands the technology better.
4. ‘Urgency is our only saviour’
Tackling climate change and building new energy systems
We have an ‘existential climate crisis’, Ajay Banga told us on Wednesday. “A sense of urgency is our only saviour”, he said. It was a message repeated throughout the week.
As John Kerry told a session on what we need to do after COP28, it can’t be business as usual. We have the technology, he said, but we’re not deploying it fast enough.

18 January
The Davos elite embraced AI in 2023. Now they fear it.
(WaPo) [On] Tuesday…Swiss President Viola Amherd called for “global governance of AI,” raising concerns the technology might supercharge disinformation as a throng of countries head to the polls. …CEO Satya Nadella sought to assuage concerns the AI revolution would leave the world’s poorest behind, following the release of an International Monetary Fund report [AI Will Transform the Global Economy. Let’s Make Sure It Benefits Humanity] this week that found the technology is likely to worsen inequality and stoke social tensions. And Irish Prime Minister Leo Varadkar said he was concerned about the rise of deepfake videos and audio, as AI-generated videos of him peddling cryptocurrency circulate the internet.
‘No shortages of headwinds’: Chief economists detail the hurdles facing the global economy
(WEF) The global economy is fraught with uncertainty, according to the World Economic Forum’s latest Chief Economists Outlook.
Global economic activity remains slow, financial conditions remain tight and geopolitical rifts continue to stunt economic prospects.
The World Economic Forum’s January 2024 Chief Economists Outlook  highlights the precarious nature of the current economic environment.

At Davos, conflict, climate change and AI get top billing as leaders converge for elite meeting
(AP) — The Earth is heating up, as is conflict in the Middle East. The world economy and Ukraine’s defense against Russia are sputtering along. Artificial intelligence could upend all our lives.
The to-do list of global priorities has grown for this year’s edition of the World Economic Forum

10-11 January
Davos 2024: A primer on the global elite gathering
As world leaders, CEOs, bankers and billionaires meet in Davos to try and solve the world’s problems, rising inequality and instability have eroded global trust in the institutions they represent.
Fake News Danger Becomes Top Davos Worry in Year of Elections
Forum’s survey shows misinformation as biggest short-term risk
Hardship, false facts and elections threaten ‘potent mix’
(Bloomberg) The annual poll conducted by the forum among more than 1,400 risk experts, policymakers and industry leaders put “misinformation and disinformation” at the top of threats facing the global economy in the short term. Concerns about the health of the planet dominate the outlook for the coming decade, a trend already seen in previous surveys.
Davos 2024: Extreme weather and misinformation top global risks
(Reuters) – Risk specialists see extreme weather and misinformation as most likely to trigger a global crisis in the next couple of years, a World Economic Forum (WEF) survey released on Wednesday said.
While extreme weather was identified as the bigger risk in 2024, misinformation and disinformation came second and were found to be the most severe global risk over the next two years.
The Global Risks Report (PDF) explores some of the most severe risks we may face over the next decade, against a backdrop of rapid technological change, economic uncertainty, a warming planet and conflict.
The World Economic Forum Annual Meeting 2024 will primarily focus on exploring the opportunities enabled by the new technologies and their implications on decision-making and global partnership.
The 54th Annual Meeting of the World Economic Forum will provide a crucial space to focus on the fundamental principles driving trust, including transparency, consistency and accountability.

9 January
Global economy will slow for a third straight year in 2024, World Bank predicts
(AP) — Hobbled by high interest rates, persistent inflation, slumping trade and a diminished China, the global economy will slow for a third consecutive year in 2024.
That is the picture sketched by the World Bank, which forecast Tuesday that the world economy will expand just 2.4% this year. That would be down from 2.6% growth in 2023, 3% in 2022 and a galloping 6.2% in 2021, which reflected the robust recovery from the pandemic recession of 2020.
Heightened global tensions, arising particularly from Israel’s war with Hamas and the conflict in Ukraine, pose the risk of even weaker growth. And World Bank officials express worry that deeply indebted poor countries cannot afford to make necessary investments to fight climate change and poverty.

8 January
Nouriel Roubini: Where Will the Global Economy Land in 2024?
Heading into 2024, most economists and market analysts have adopted a baseline scenario in which most major economies avoid both a recession and renewed inflation – the much-desired “soft landing.” But the current encouraging consensus could still be derailed by any number of factors, not least geopolitics.

5 January
How Can the World’s Growth Engine Do Better?
The biggest threat facing the Chinese economy is a catastrophic debt-deflation spiral. To boost aggregate demand and prevent a prolonged period of deflation and stagnation, policymakers must adopt aggressive fiscal and monetary policies and reform China’s state-owned banks.
(Project Syndicate) The global economy demonstrated remarkable resilience in 2023, as the United States defied expectations and managed to avoid a recession. India, Vietnam, and Japan also achieved impressive economic performance given the circumstances. But while these countries have good reasons to be optimistic about 2024, China will most likely be the single largest contributor to global GDP growth this year.

2023

28 December
The global economy in 2024: Key clues to watch out for
US interest rates, oil prices and the Chinese economy will determine the global economy next year.
According to the Organisation for Economic Co-operation and Development (OECD), global output, while highly fragmented, will slow in 2024 as high interest rates snuff out persistent inflation and, by extension, economic activity
The Economist asks Will the BRICS challenge America in 2024?
The economic bloc wants to compete with America for dominance

11 December
World economy on brink of ‘cold war two’, IMF official warns
Gita Gopinath says global economy’s fragmentation into power blocs risks wipeout of trillions of dollars in GDP
Gita Gopinath, the IMF’s first deputy managing director, said the accelerating fragmentation of the world economy into regional power blocs – centred around the US and China – risked wiping out trillions of dollars in global output.
“If we descend into cold war two, knowing the costs, we may not see mutually assured economic destruction. But we could see an annihilation of the gains from open trade,” she said.
Warning that the world was at a “turning point” as tensions mounted between the planet’s most powerful nations, Gopinath urged governments to pull back from the brink and work together on shared economic priorities where possible.

7 December
The Global Economy’s Unsolved Problems
José Antonio Ocampo, a former United Nations under-secretary-general and a former minister of finance and public credit of Colombia
A string of high-level meetings this year have produced a number of proposals for dealing with key global challenges, from unsustainable public debt to climate change. But few decisions have been made, and some of the most prominent proposals are deeply flawed.
(Project Syndicate) The global economic agenda has been packed in 2023. There was the United Nations High-Level Political Forum in July, dedicated to monitoring progress toward the Sustainable Development Goals. The second SDG Summit was held in September, as was the G20 summit in New Delhi, followed in October by the annual meetings of the World Bank and the International Monetary Fund in Marrakesh. In November, the UN adopted an important decision on international tax cooperation. Now, leaders are meeting in Dubai for the annual UN Climate Change Conference (COP28).
One obvious lesson from the meetings so far is that the world is taking far too long to achieve the SDGs – especially ending poverty and ensuring food security – and to make meaningful progress in the fight against climate change. Another is that the global economy is confronting policymakers with multiple risks: in 2022, a surge in inflation led to rapid interest-rate hikes in many countries, which, together with soaring public debt, limited governments’ ability to use expansionary fiscal policy to counter slowing growth. Although inflation is coming down, high interest rates and slower growth persist.
Among the measures that have been proposed at and around this year’s meetings, three stand out. First, international development financing must be expanded significantly. Second, developing countries need more support to enable them to contribute to the provision of global public goods, particularly the fight against global pandemics and climate change, and manage the effects of international economic disruptions. Third, some form of relief must be provided to countries at high risk of debt distress – a group that includes at least one-third of developing economies.

8-10 November
War, Inflation and Hints of Optimism Dominate New Economy Forum
Singapore minister says world is facing a ‘moment of danger’
But China’s Han says recent meetings with US a positive signal
The world is facing a “moment of danger” with wars in Ukraine and Gaza and “tripwires” that could trigger conflict in Taiwan and the South China Sea, Singapore Foreign Minister Vivian Balakrishnan said as the three-day event got underway. “I’m very uncomfortable.”
The sixth annual Bloomberg New Economy Forum will return to Singapore, mobilizing the world’s most influential leaders
This year’s theme, “Embracing Instability,” highlights the challenges confronting the global economy and underscores the opportunity to better understand and address underlying issues such as persistent inflation, geopolitical tensions, the rise of artificial intelligence and the precarious state of the world’s climate.
5 November
New Economy: Xi-Biden preview
We’re bringing together some 450 leaders from across the region and around the world for a series of discussions that bridge the divides between East and West (as well as between the Global North and Global South).
On Friday, China confirmed that Vice President Han Zheng will attend the Forum in person and deliver an opening-day address. Coming only days before the in San Francisco, he’ll almost certainly give a sense of what to expect from the critical meeting on the sidelines between US President Joe Biden and China President Xi Jinping.
Even as the US and China double down on export and capital restrictions and joust over the future of Taiwan, both governments are gradually resuming dialogues on a range of issues, including nuclear arms control, maritime affairs and Israel’s war with Hamas. As US Treasury Secretary Janet Yellen described it last month, there’s now a re-engagement following a “dangerous” period of almost no senior-level talks.

Middle East war could spark global recession, say Wall Street experts
Fear adds to Russia-Ukraine conflict risk and increases ‘probability of European and of US recession’
(The Guardian) A global recession could be set in motion by the conflict in the Middle East as the humanitarian crisis compounds the challenges facing an already precarious world economy, two of Wall Street’s biggest names have warned. … In terms of the global economy, Larry Fink, chief executive of the world’s largest asset manager, BlackRock, said a combination of the Hamas atrocities of 7 October, Israel’s resultant attack on Gaza and Russia’s invasion of Ukraine last year had pushed the world “almost to a whole new future”. …
Jamie Dimon, chairman of JP Morgan, calls Israel’s war on Hamas and Russia’s invasion of Ukraine ‘scary and unpredictable’
“What’s happening on the geopolitical front right now is the most important thing for the future of the world – freedom, democracy, food, energy, immigration,” he said.
The comments come three weeks after similar apocalyptic remarks from Dimon, who is one of the world’s best known financiers. Last month, he warned that it was “the most dangerous time the world has seen in decades”, with the escalating conflict potentially having “far-reaching impacts” on energy prices, food costs, international trade and diplomatic ties.JP Morgan CEO warns world may be facing ‘most dangerous time’ in decades
Jamie Dimon says Israel-Gaza conflict may have ‘far-reaching impacts’ on energy prices, food costs and international trade

Five trends to watch in 2023 as the global economy tries a dangerous reboot
By Josh Lipsky
(Atlantic Council) If you’ve listened closely to financial leaders over the past few months, one theme comes across clearly: They just want to get back to where they were before the pandemic.
If we could just get back to 2 percent inflation, if we could rewind the clock to before Russian President Vladimir Putin invaded Ukraine, if we could only get China to open up and manufacture for the world, then things would be fine.
This desire for normalcy is misguided. Europe’s over-reliance on Russian energy was a vulnerability waiting to be exploited. Low inflation vexed the US Federal Reserve in 2019 because it signaled weakness in the labor market. As for China, if you think things were running smoothly in 2019, you probably forgot about the trade war.
As we enter 2023, here are five underappreciated trends to watch in geoeconomics. With each trend, policymakers can focus on a return to the status quo or build something different, and better, this year.
3 January
Trends That Will Define the Coming Years
They include deglobalization, stagflation and the bursting of the tech bubble.
By Antonia Colibasanu
(Geopolitical Futures) In addition to the global economic slowdown, for the first time since the 1970s the world is simultaneously facing high inflation. The drivers of this bout of inflation include excessively loose monetary and fiscal policies that were kept in place for too long, the restructuring of global trade caused by the pandemic, and the sharp spike in the cost of energy, industrial metals, fertilizers and food as a result of Russia’s invasion of Ukraine. Angered by the unequal distribution of the gains of globalization, voters demanded more government support for workers and those left behind. However well-intentioned, such policies risk an inflationary spiral as wages and prices struggle to keep pace with one another. Rising protectionism also restricts trade and impedes the movement of capital, limiting improvements on the supply side.

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