[TIANJIN] The world is facing the “most complex” geopolitical situation seen in decades, said the head of the World Economic Forum (WEF) on Tuesday (Jun 24), warning that turmoil was “impacting global growth”.
“It is the most complex geopolitical and geo-economic backdrop we’ve seen in decades,” WEF president and chief executive officer Borge Brende said ahead of a meeting of the multilateral forum in the northern Chinese city of Tianjin.
“If we are not able to revive growth again, we can unfortunately see a decade of lower growth,” he warned.
World leaders including Singapore Prime Minister Lawrence Wong will attend this week’s WEF meeting in the port city of Tianjin – known colloquially as the “Summer Davos”.
The meeting comes hard on the heels of the US’ involvement in the Iran-Israel conflict, and follows months in which the global economy has been battered by a tariff war launched by US President Donald Trump.
Earlier this month, the World Bank cut its forecast for global growth this year from 2.7 per cent to 2.3 per cent, following a similar reduction by the International Monetary Fund.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Brende said that it was still too soon to predict the impact of Trump’s swingeing tariffs.
It is “too early to say what these tariffs will end with, because the negotiations are still ongoing”, he said.
“I think the jury is still out, but the traditional globalisation we saw is now changed into a different system. That is a new chapter… especially since trade was the engine of growth.”
Brende also warned mounting conflict could have a “very negative impact” on global growth.
The WEF gathering in Tianjin comes at an uncertain juncture for the Chinese economy, which has struggled under a years-long property-sector crisis and sluggish domestic spending.
“China really does matter,” Brende said, adding he expects the country to account for almost 30 per cent of global growth this year.
“China is pivoting its economy more towards digital trade, towards services and also now opening up for increasing domestic consumption – something that is important,” he said.
Officials in Beijing have since late last year unveiled a string of aggressive measures, including key rate cuts and cancellations of home-purchasing restrictions.
But many economists remain sceptical that the Chinese economy can achieve the government’s official growth target for this year of around 5 per cent.
With the tumultuous trade war threatening shipments from the manufacturing powerhouse, Beijing is looking to emerging technologies such as artificial intelligence (AI) as potential sources of future growth.
“In the past, trade was the driver of growth, but you cannot exclude that new technologies including AI can… maybe replace the important role that trade had”, Brende said.
While trade will remain “very important”, he added, disruptive technologies can provide the productivity boost needed to “avoid a decade of sluggish growth”.
Attendees bustled around a cavernous conference hall in Tianjin on Tuesday, ahead of talks with a line-up of speakers including former UK prime minister Tony Blair. Chinese Premier Li Qiang is expected to deliver a keynote speech on Wednesday. AFP
