JOKO: WINTER IS COMING
Guard against growing risks facing world’s economy, urges Indonesian president
INDONESIAN President Joko Widodo urged global central bankers and finance ministers yesterday to guard against growing risks facing the world’s economy, as a heated a China-United States trade war roils both emerging and developed markets.
At the plenary session of the International Monetary Fund (IMF) and World Bank meetings being hosted by Indonesia, Joko peppered his speech with references to the HBO series “Game of Thrones”, where families and kingdoms battle for power in a fictional continent, to explain risks facing the global economy.
“All these troubles in the world economy, are enough to make us feel like saying: ‘Winter is Coming’,” he said, using a phrase that characters in the popular fantasy series often use to refer to the lurking threats that could destroy them.
The meetings, attended by more than 19,000 delegates and other guests, including ministers, central bank heads and some leaders, come at a time of renewed tumult in global financial markets as investors dumped hundreds of billions of dollars worth of equities from Wall Street to European and Asian bourses.
The fear is that the China-US trade row could upend global supply chains, and chill international trade and investment — a risk underscored by Joko.
He said with growing rivalry in the world economy, “the situation could be more critical compared to the global financial crisis 10 years ago”.
He did not single out any one country but emerging markets, like Indonesia, have been battered by stormy conditions amid worries about the impact of an escalating China-US trade war and monetary policy tightening in advanced economies.
The market ructions have now cascaded through to developed markets with Wall Street extending a slide into a sixth session on Thursday amid the trade war fears.
The US and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other’s goods over the past few months.
The tariffs stem from the Trump administration’s demands that China make sweeping changes to its intellectual property practices, rein in high-technology industrial subsidies, open its markets to more foreign competition and take steps to cut a politically sensitive US goods trade surplus.
Potentially further inflaming tensions, China reported yesterday an unexpected acceleration in export growth last month and a record trade surplus with the US, which rose to US$34.13 billion (RM141.7 billion) from August’s US$31.05 billion.
“Lately it feels like the relations among the major economies are becoming more and more like “Game of Thrones”,” said Joko.
“Are we so busy fighting with each other and competing against each other that we fail to notice the things which are increasingly threatening, all of us alike, rich and poor, large and small.”
Earlier this week, the IMF cut its global economic growth forecasts for this year and next year to 3.7 per cent, from 3.9 per cent in its July forecast, saying that the trade war was taking a toll and emerging markets were struggling with tighter liquidity and capital outflows.