The World Economic Forum (WEF) ended on Saturday after creating lots of buzz and talking points. Today’s world has become increasingly complex and difficult to predict; from sectional extremism to climate change, falling oil prices to inequality, the playing field gets leveled and re-leveled faster than the best analysts can predict.
It was against this backdrop that the forum assembled thousands of experts, hundreds of business leaders and a few world leaders to determine what the new global context would be. One of such high-profile attendees, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), gave spectacular insights on the new imperatives for global growth. According to her, the three factors that will determine how much the global economy would grow, going forward are Trade Liberalization, Climate Change and Structural Reforms.
It has to do with the systematic removal or reduction of restrictions or barriers on the free exchange of goods between nations; based on this definition, it is a form of regional integration. Facilitating trade liberalization would involve the removal or reduction of both tariff and non-tariff obstacles, including duties, rules, quotas and the like. With this in place, consumers will see lower prices for some of their most purchased items, countries can specialize in producing those goods and services for which they have a comparative advantage, and the overall effect can result in tremendous economies of scale, definitely a win-win scenario for all players involved.
The story around climate change continues to worsen as more predictions of the ill effects from this phenomenon are revealed. The impacts are seen in higher temperatures, changing landscapes, rising seas, increased risk of drought, fire and floods and these all translate into economic losses. Predictions have it that as much as 25 percent of the earth’s species could be headed for extinction by 2050 if this trend is not reversed, hence the renewed emphasis by Lagarde.
The IMF has been championing the idea of structural reforms for quite some time now; these broad set of actions geared at improving fiscal consolidation, balancing budgets and improving governance while fighting corruption have become necessary in many economies around the world due to the volatile conditions that now characterize the global economy.
The triple combination of low inflation, low growth rates and high unemployment figures have established some sort of gradient that calls for consistent and concerted efforts from around the world to remedy. The new global context is that of significant uncertainty littered with opportunities that can only be fully harnessed as the insecurities are alleviated.
By Emmanuel Iruobe