Two Sugars: A Dose of Economics.
Martin R Ebang Nve
Junior Data Analyst | Problem Solver | Creative Thinker with Strong Interpersonal Skills
I was recently at a retreat in Greenwich Borough in London, UK. Such a peaceful location with birds singing peacefully, green lands and a ferry to get there. A peace that we lack globally and on its absence Putin strikes as a dangerous edge that can lead to human destruction.
The theme of the meeting at the World economic Forum at Davos 2024 is Rebuilding Trust which should be obtained gradually. You wouldn’t leave the keys to your house to a stranger. Would you ?
Let’s think twice, In order to have trust there needs to be a bilateral will and a path fuelled by incentives , a simply analogy is how an Airbnb works nowadays. Leaving our homes vacant to a couple of strangers in exchange for some trust in this case some money subjected to a review at the end of the vacation. It is fundamentally a transaction in which you trust your guest will behave and where he/she/they expect to have a good time. In its absence we simply need to be more generous and caring so to expect from the contra part a genuine effort of a quality in its service this can be applied to people, businesses or whole Governments.
Experts say we are not in a global bellic zone yet; at the very least, the global outlook is marked by its uncertainty. A significant portion of chief economists, 56% to be precise, harbours a pessimistic view, anticipating a weakening global economy. This sentiment is echoed by the International Monetary Fund (IMF), which forecasts a dip in global growth to 2.9% this year, a slight retreat from the previous year's 3%. The prognosis for the medium term remains subdued, casting a long shadow over future prospects.
Yet, within this landscape of cautious gloom, pockets of growth flicker on the horizon. South Asia and the East Asia and Pacific regions stand out as beacons of stronger growth, albeit with China experiencing more moderate expansion. In stark contrast, Europe faces a grim outlook, with 77% of chief economists expecting sluggish growth. Meanwhile, moderate growth is on the cards for North Africa, the Middle East, and the USA, with Latin America and the rest of Africa poised for improvement.
We need two sugars, as we stand at this crossroads, the question of resilience against potential disruptions looms large. Energy costs emerge as a significant concern for the USA, while the speed of policy implementation is deemed crucial across the board. Notably, China's encroachment on Mexico's market share and the fragmentation of capital markets, as seen in Brazil, underscore the complexities of international trade dynamics.
Amid these challenges, the role of technology, particularly artificial intelligence (AI) and robotics, shines as a ray of hope. AI, with its vast potential, is seen as a key to enhancing our lives, including alleviating mental health issues among public-facing workers through better data utilization. The synergy between AI and robotics promises transformative change, though it may initially displace jobs before ultimately proving beneficial in the long term.
Inflation, a persistent thorn in the side of global economies, shows signs of moderation, yet prices remain elevated, underscoring the urgency of transitioning to renewable energies. The redirection of capital towards disruptive sectors and renewable energy emerges as a strategic imperative, even as efforts to contain inflation's damage show promise.
Looking ahead to 2024, sources of growth such as India and Mexico, along with the emphasis on green growth and sustainability, are identified as critical for propelling global growth.
The BRICS coalition, comprising Brazil, Russia, India, China, and South Africa, represents a significant alliance focused on economic development, financial governance, and social justice across emerging economies. With the UAE's recent inclusion, the bloc underscores its commitment to global humanity and economic engagement, particularly with the Global South. The UAE's entry, primarily for economic reasons, aims at reducing inflation and promoting global economic policies, including infrastructure and development banking initiatives.
South Africa's participation since 2010 highlights a continuous effort to mobilize the South's savings for its development, emphasizing the necessity for international institutional reform. India, highlighting its achievements and contributions like cost-effective space missions, extensive higher education, and IT prowess, views BRICS as a platform to bridge the Global North and South, advocating for democracy, social justice, and global welfare.
China and India's lead in renewable energy, contributing to 55% of the world's new solar capacity in 2023, points to BRICS's role in addressing global challenges like poverty through sustainable development. This effort is also seen as a way to catalyse new industries and economic growth.
Metrics for joining BRICS include financial governance and a positive impact on the financial ratings of member countries. The expansion of BRICS to include nations like the UAE signifies a strategic shift towards inclusivity and diversification, reflecting 29% of the World's GDP and covering over 3.5 billion people.
India's economic growth alongside efforts to alleviate poverty and promote digital infrastructure, underscores the potential for BRICS nations to contribute significantly to global economic stability and social equity.
The emphasis on renewable energies, technological innovation, and collaborative growth strategies by the private sector in China exemplifies a shared vision among BRICS nations for a sustainable and equitable global economy, potentially mitigating challenges such as high inflation and interest rates through increased supply and timely delivery of goods, including carbon-neutral transportation options.
Now let’s analyse deeper interventions by president of France Emmanuel Macron, President of Ukraine Zelenskyy, Premier of China Li Qiang, President of Argentina Javier Milei, USA Jake Sullivan National Security Advisor and prime minister of India’s at the WEF Annual meeting 2024.
Key Highlights of Macron's Address:
Special Address, Ukrainian President Zelenskyy
In a profound and impactful address by Ukrainian President Volodymyr Zelenskyy, the enduring spirit and resilience of Ukraine amidst the throes of war are vividly encapsulated. Marking two years since the onset of the conflict, Zelenskyy portrays a nation unbowed by the shadow of aggression cast by Russia.
Central to Zelenskyy's message is the belief that the culmination of this global turmoil must be a stable and just peace. This is a foundational principle for a future where justice and stability reign supreme. The Ukrainian leader's call for international support, a plea for solidarity therefore beckon for collective action against the aggressor.
Despite the devastation brought by war, Ukraine's economy has showcased an extraordinary growth rate of 5%. This economic resilience in the face of adversity is attributed to several factors. Firstly, the unwavering spirit of the Ukrainian people and their adaptability in times of crisis have been pivotal. Businesses, both small and large, have adjusted operations, shifted focus, and found new ways to thrive, often with a renewed emphasis on domestic production and markets. Secondly, international support has played a crucial role, with financial aid, investments, and economic sanctions against Russia bolstering Ukraine's economy. Lastly, the war has spurred innovations and a rapid digital transformation within the Ukrainian economy, further contributing to its growth.
Impressive achievements by a nation standing still a war that some may have thought to be a quick task for the Russian army.
Rebuilding Trust by Li Qiang, Premier of the people’s Republic of China
In Chinese culture, the Year of the Dragon is highly significant, symbolizing strength, fortune, and vitality. It's seen as an auspicious period for starting new ventures or making major life decisions, which can positively affect the economy through increased investment and consumer spending. Additionally, Dragon years often see a rise in birth rates, as families hope to give their children the Dragon's favourable traits. This can temporarily boost industries focused on children but also poses challenges for ensuring sustainable growth and adequate social services.
Premier Li Qiang's address began with a poignant reflection on the erosion of trust globally, pinpointing this as a critical barrier to further economic globalization and peaceful development. The theme of Davos 2024 resonates as a foundational element, essential for fostering a cooperative international environment that can propel global growth and address current challenges.
The Premier's speech outlines several concrete proposals aimed at enhancing global cooperation:
Li Qiang provides a robust overview of China's economic milestones, innovation capabilities, and its pivotal role in the global economy. Key points include:
The Premier's vision extends beyond China's borders, advocating for a world where trust, mutual benefit, and cooperative spirit guide international relations.
Jake Sullivan, the United States National Security Advisor, laid out a comprehensive strategy that reflects the Biden administration's approach to international relations and national security. This strategy is multifaceted, focusing on diplomacy, investment in national and allied capabilities, economic adaptation, and the support of Ukraine against Russian aggression.
Diplomatic Endeavours and Strategic Investments
Sullivan emphasized the importance of "pursuing intensive and proactive diplomacy" to manage the United States' key relationships globally. This approach signifies a departure from reactive policies, aiming instead to shape the international order proactively. The administration is also committed to "investing in national sources as well as allies and partners," underscoring the belief that a stronger, more unified front can better address global challenges.
Adapting to the International Economic System
The speech highlighted the need for adaptation to the international economic system. This adaptation involves not just navigating the complexities of global trade and finance but also ensuring that the economic system works to the benefit of the United States and its partners.
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Support for Ukraine
A significant portion of Sullivan's address was dedicated to the situation in Ukraine. He pointed out that, two years into the conflict, "Putin has failed on his imperialism quest" to subdue Ukraine. Despite this, Russia is seeking additional military support from countries like North Korea and Iran. The United States, in response, is committed to standing by Ukraine, providing training to its troops, and innovating with the private sector to solve key technological challenges on the evolving battlefield, such as electronic warfare and drone technology.
Middle East Peace and Security
Sullivan also touched upon the broader region's security, mentioning efforts towards "de-escalation in warfare regions like Yemen" and envisioning a future where "Palestinians have a state of their own" and "Israel can live in peace." This vision includes a Gaza that is never again used as a platform of terror.
Competition and Cooperation with China
The address acknowledged the multifaceted relationship with China, marked by both competition and cooperation. While the United States is "competing directly with China in multiple dimensions," there is also an effort to "work together to minimize risks of Artificial Intelligence."
Protecting Foundation Technologies
A key part of Sullivan's strategy involves protecting foundational technologies through what is described as a "small yard, high fence" approach. This means imposing strict controls on critical technologies like advanced semiconductors, supercomputers, and chips to prevent strategic competitors from exploiting these technologies against American interests or those of its allies. Export restrictions and regulations are being focused on these areas, with key allies also acting on their concerns.
President Javier Milei of Argentina delineated a transformative vision for the nation, advocating for a resurgence of free enterprise, entrepreneurship, and a steadfast adherence to the rule of law. President Milei's discourse reflects a broader concern for the Western world, which he perceives as imperilled by the rising tide of socialism. He posits that collectivism offers no real solutions to the global challenges we face, arguing instead for capitalism as the cornerstone for eradicating poverty.
Milei's advocacy for free trade and capitalism is unequivocal; he presents it not merely as an option but as the singular economic system capable of fostering true prosperity. He critiques the current state of social justice in Argentina as fundamentally flawed, suggesting that it fails to contribute to the general well-being of society. This failure, according to Milei, stems from a system of state finance predicated on taxation and coercion—mechanisms he deems both unfair and unjust.
At the heart of Milei's vision is a turn towards libertarianism, which he champions as the most viable path forward. Libertarianism, in essence, is a political philosophy that prioritizes individual freedom, minimal government intervention, and voluntary association across all domains of society. It is built on the belief that individuals should have the autonomy to live their lives as they choose, provided they do not infringe on the rights of others. Libertarians advocate for a limited government role, confined to protecting individuals from force and fraud, and believe that a free-market economy is the most efficient and just way to distribute resources and opportunities.
In aligning Argentina's future with libertarian principles, Milei calls for a paradigm shift towards greater personal and economic liberty, suggesting that this approach will not only rectify Argentina's socio-economic injustices but also serve as a beacon for the Western world against the encroachments of socialism and collectivism.
At this time we can agree that we are in an era where the global economy faces unprecedented challenges, India emerges as a beacon of hope and dynamism, as articulated by Ministers Smriti Irani and Hardeep Singh Puri. Their vision for India's next decade is positioning India as a pivotal force in global economic growth. With an anticipated growth rate of 6.2% amidst a moderate inflation of 4% to 6%, India is set to redefine the contours of global economic landscapes. The country's aggressive goal to contribute 16% to global growth is a clarion call to the world, signalling India's readiness to not just participate but lead on the global stage. This ambition is underpinned by a holistic approach towards internationalization, emphasizing engagement, gender inclusion, and amplifying voices from diverse regions, including the African Union. The significance of BRICS, representing 46% of the world's population and as previously mentioned, underscores the collective potential of emerging economies in shaping a new global order.
The transformative impact of India's growth trajectory extends to the job market, with data science and IT sectors poised to add 1 million new jobs. This surge is reflective of India's prowess in technology and innovation, ensuring that its growth is inclusive and sustainable. The digitalization of credentials, crucial for the 940 million eligible voters, exemplifies India's commitment to leveraging technology for enhancing democratic participation and governance.
The strategic investments by global corporations, such as Coca Cola's significant presence in India, underscore the country's attractiveness as an investment destination. The Coca-Cola Company investment, which is set to grow to a billion dollars, not only contributes to direct employment and infrastructure development but also underscores the importance of sustainable practices, given the reliance on water resources.
India's focus on speed, and implementation, particularly in crucial sectors like semiconductors, reflects a pragmatic approach to balancing innovation and regulation. The integration of technology into everyday life, as exemplified by a street vendor accepting payments via QR codes, captures the essence of India's digital revolution. This is not just an innovation but a cultural shift, democratizing access to digital financial services and embodying the inclusive growth India strives for.
India's strategy to navigate the pace of technological advancement through collaboration and a digital-native mindset offers a blueprint for future growth. It emphasizes the need to embrace technology not with fear but as a tool for problem-solving and integrating the most vulnerable sections of society.
As India strides into the future, its journey is not just about economic metrics but about setting a precedent for inclusive, sustainable, and innovative growth. The vision articulated by Ministers Irani and Puri is a narrative of optimism, resilience, and collective progress, marking India as a cornerstone of the global economy in the coming decade.
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I hope you enjoyed this article and your cup of tea with two sugars!
Kindest Regards,
Martin R Ebang Nve - Just for humanity✍🏿🙂
References:
Special Address President of France, Emmanuel Macron
Special Address Jake Sullivan
Ukrainian President Zelensky Speech
Special Address by Premier of China Li Qiang
Special address President Emmanuel Macron of France
Special Address Presiden Javier Milei of Argentine
BRICS in Expansion