In a blog post at the World Economic Forum (WEF) in Davos, he highlights the many issues facing the world today, “from the global economic slowdown and climate change to the cost-of-living crisis and high debt” . According to her, solving this problem is complicated by geopolitical tensions. For example, there are trade conflicts and the war in Ukraine.
Cooperation
And Georgieva’s warning should be taken seriously, says BNR in-house economist Han de Jong. “Whether the numbers he cites are correct remains to be seen, but we must realize that the global economy has become increasingly integrated over the past few decades,” says De Jong. It’s called globalization. And because of that globalization – for example through the dismantling of communism or the opening up of China – about two billion people have joined the global market economy.’
According to De Jong, this greatly promoted the international division of labour. “And that increases prosperity, and that goes for the whole world,” he says. “Not only with us, but as a result, one and a half billion people have been lifted out of poverty.”
fragmentation
The fragmentation of the world economy that De Jong speaks of has its origins in the reign of former US President Donald Trump. “The world economy has taken a series of blows, including Trump starting a trade war with China,” De Jong said. ‘In fact, with the Inflation Reduction Act, the Americans have started a kind of trade war with Europe, although to describe it as that could be an exaggeration. But it is definitely the domestic market first.’
De Jong also expects this to continue. “Then we had the pandemic and the call to shorten supply chains,” he continues. “Also, we have the war in Ukraine, which made us not want to trade with Russia anymore. A new blow to world trade, therefore”.
A lot at stake
World leaders and global business leaders gather this week in Davos, Switzerland. Børge Brende, the president of the WEF, already warned last week that there is “a lot at stake” at the important networking event. In total, more than 2700 politicians, high-level men and women, academics and representatives of civil society organizations will participate in the sessions. Among them are Prime Minister Rutte and several other cabinet members.