Arab Times

Climate change a major economic threat


and workers’ mobility,” he added.

“There is a lot of political pressure coming from the extremes, which could undo a lot of the economic integratio­n that has occurred.”

Speaking in his IMF office just a few blocks from the White House, Obstfeld, 63, said other pressures were also stressing the 28-country EU bloc.

“Another obvious one is Britain wanting to possibly leave the European Union,” he said, raising the “Brexit” issue that is increasing­ly making headlines in Europe.

Obstfeld arrived at the Fund in September to replace French economist Olivier Blanchard, who held the chief economist job throughout the unpreceden­ted financial crises in the United States and Europe.

Obstfeld, whose position entails advising the management and member countries of the global crisis lender on economic conditions, faces some different challenges from Blanchard, particular­ly the impact of the sharp slowdown in the world’s second largest economy, China.

An internatio­nal economics specialist who studied at Cambridge and MIT and taught at Harvard and the University of California, Berkeley, Obstfeld has to keep watch on multiple hot issues and broader long-term trends.

“Climate change is a major economic threat. Warming reduces productive efficiency, climate disasters can be deeply disruptive to economic activity,” he said.

The Fund looks at how climate change will hit the economies and budgets of countries impacted the most, and tries to help them prepare.

With an upcoming global summit in Paris on action against warming, Obstfeld said countries need to understand it is a collective action problem.

If it isn’t solved, he said, warming “can threaten their population and impose macroecono­mic risks.”

The focus of the COP21 summit is obtaining pledges for carbon emissions. Obstfeld said limits can have adverse effects for some industries.

But, for one, many industries essentiall­y get a subsidy by being able to pollute without paying for it, he added. In addition, he said, implementi­ng carbon dioxide limits “stimulates a lot of innovation and a lot of investment.”

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