Accelerating inequality, remote work and greater tech market dominance are among the pandemic’s emerging trends that are likely here to stay for some years. Beyond managing the pandemic and vaccine rollout, these trends could shape a new era of fiscal, monetary and competition policy, as well as bigger government. Meanwhile, Chinese President Xi Jinping has called for both greater global efforts in the fight against an unprecedented public health crisis and a renewed commitment to multilateral cooperation, in a special address to business, government and civil society leaders taking part in the World Economic Forum’s virtual event, The Davos Agenda. He said “The pandemic is far from over and the recent resurgence in COVID cases reminds us that we must carry on the fight,” Xi said. “There is no doubt that humanity will prevail over the virus and emerge even stronger from this disaster.”
Deglobalisation is seen as the least likely of current trends to continue in the longer term; particularly as international coordination is key to resolving global challenges such as vaccine manufacturing and distribution. These are some of the findings of the World Economic Forum’s Chief Economist Outlook that has just been published. The latest edition of the Forum’s Chief Economists Outlook is the outcome of consultations with leading chief economists from the public and private sectors. The report outlines the global economic outlook and lays out the priorities for policy-makers and business leaders to chart a post-pandemic recovery agenda that is fair, inclusive and sustainable. Chief economists are impressed at the speed and scale of fiscal policy measures taken in the wake of the pandemic. However, as the global vaccination campaign picks up pace, they see the second half of 2021 as the optimal time to begin transitioning from general emergency spending to more targeted spending on future growth sectors. A majority suggest that taking action to pay down the significant national debts accumulated in the past year can wait until 2024 or beyond.
With central bank financing of public debt through quantitative easing now at the core of monetary policy in response to the crisis, chief economists believe this could lead to less central bank independence over time. Many also suggested that central banks should be pursuing environmental objectives directly through their asset purchases, which would represent a significant departure from past practice. Most chief economists expect a brighter outlook as the vaccine helps accelerate the recovery, and as a new US administration contributes to tackling short-and long-term challenges, both domestically and globally, through revived multilateral institutions. However, most of those surveyed see virus mutations as the biggest risk for 2021, slowing efforts to contain the pandemic and leading to new lockdowns. Another concern relates to poorly calibrated policy responses that risk failing to differentiate between the deep structural impact of the pandemic on some sectors and the temporary halting of activity in other sectors.
“This report makes clear that precisely calibrated and coordinated fiscal, monetary and competition policy hold the key to global economic recovery and transformation. As the roll-out of vaccines picks up pace, there won’t be a better time for governments to work together and invest in a fair transition to a greener, more inclusive economy,” says Saadia Zahidi, Managing Director at the World Economic Forum. Xi Pinging said “We should stay committed to keeping up with the times instead of rejecting change. Now is the time for major development and major transformation.” Xi outlined several objectives required for a better future. They include the need to work together to achieve strong, sustainable, balanced and inclusive growth, to close the gap between developing and developed countries as a prerequisite for global prosperity, and to strengthen global cooperation in addressing the big common challenges, namely COVID-19 and climate change.
“We hope these efforts will bring more cooperation opportunities to other countries and give further impetus to global economic recovery and growth,” he said. We have been shown time and again that to beggar thy neighbour, to go it alone, and to slip into arrogant isolation will always fail. Let us all join hands and let multilateralism light our way toward a community with a shared future for mankind.” Zero sum game or winner takes all is not the philosophy of the Chinese people. We should stay committed to international law and international rules, instead of seeking one’s own supremacy”
Continuing he said “We need to deliver on the Paris Agreement on climate change and promote green development,” he said. “We need to give continued priority to development, implement the Sustainable Development Goals, and make sure that all countries, especially developing ones, share in the fruits of global development.” Xi reiterated China’s commitment to implement the 2030 Agenda for Sustainable Development and promoting a green, low-carbon way of life and production, and achieving carbon neutrality before 2060. “The earth is our one and only home. To scale up efforts to address climate change and promote sustainable development, bears on the future of humanity. Despite the trillions of dollars in relief packages worldwide, global recovery is rather shaky and the outlook remains uncertain. We need to focus on current priorities, and balance COVID response and economic development. Macroeconomic policy support should be stepped up to bring the world economy out of the woods as early as possible. Containing the coronavirus is another pressing task for the international community, he said, stressing that closer solidarity and cooperation, more information sharing and a stronger response are what is needed to defeat COVID-19. He said China is committed to sharing its experience with other countries and assisting those less prepared for the pandemic and work for greater accessibility to COVID vaccines in developing countries.
He also said China will continue to promote economic globalisation and advance technology and innovation, and is committed to following through on its policy of opening up and continuing to promote trade and investment liberalisation. “Science, technology and innovation is a key engine for human progress… China will create an open, fair, equitable and non-discriminatory scientific environment that is beneficial to all.” Klaus Schwab, the World Economic Forum’s Founder and Executive Chairman, thanked China for taking an active part in global efforts to combat COVID-19 and to implement the 2030 Agenda for sustainable development. 2021 will be the critical year to re-establish trust in our ability to shape our common future in collective and constructive ways,” Schwab said. “We must win the fight against the virus, we must reinvigorate global economic growth and make it more robust, resilient, inclusive and sustainable, and at the same time, we must accelerate the transition to a net zero economy.” He added: “We must come together to ensure that we capture the moment and move into the age of collaboration to build a better world.”