Mohammad at Arab Strategy Forum
EXPERTS SAY THEY ARE NOT OVERLY CONCERNED ABOUT A RECESSION BEFORE 2020
His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, in conversation with Lt. General Shaikh Saif Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Interior, at the 11th Arab Strategy Forum in Dubai yesterday.
Arise in protectionism around the world is likely to make the next financial crisis more difficult to both handle and recover from, than the Great Recession in 2008, experts said in Dubai yesterday.
Jack Lew, former United States secretary of treasury, said that governments are now focusing on more domestic matters rather than international issues, making global cooperation harder at a potential time of crisis.
“If there were a global economic crisis of some sort, one has to ask whether finance ministers, central bank governors, and leaders could get together and make the kinds of judgements that were made in 2008, 2009 and 2010. This is not a moment where governments are as open to reaching out and taking action to help others,” he said.
“It’s only a matter of time. There will be an economic downturn. It will take leaders of various levels coming together to take decisive action, and I think it’s this political chaos that makes it more of a risk that this action will be harder to take.”
His comments were echoed by other experts who were all speaking at the Arab Strategy Forum, where concerns about governments taking more nationalist approaches were a running theme in every panel discussion.
Ian Bremmer, president and founder of Eurasia Group, said the next recession will see governments pointing fingers at one another rather than working together for a unified resolution.
Similarly, Mahmoud Mohieldin, senior vice president at the World Bank Group, said: “Currently, global cooperation to contain any crisis is less than it used to be. The convergence in policies to contain the last crisis sped up the ability to recover,” he said. But that’s not to say that experts are overly concerned about a recession too soon.
Debt concerns
At the Arab Strategy Forum, Bremmer said he expected markets to be relatively stable in 2019, and then see a recession in 2020 or after that.
However, an area of concern highlighted by speakers is the global level of debt. In the US alone, debt will exceed $1 trillion (Dh3.67 trillion) by 2020, while global debt currently stands at $247 trillion.
Mervyn Allister King, former governor of the Bank of England, said: “We should be concerned about the amount of debt in the world economy.”
Lew added: “I don’t think we (the US) are going to enter a recession because of it, but we will be less in a position to respond to the next recession.”