Threat of financial crisis has not gone away, WEF warns

Margareta Drzeniek-Hanouz, Head of Economic Growth and Social Inclusion System Initiative, World Economic Forum speaks during a press conference for the launch of the World Economic Forum, WEF, flagship annual Global Competitiveness Report 2017-2018, in Cologny near Geneva, Switzerland, on Tuesday. (AP)
Updated 11 November 2017
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Threat of financial crisis has not gone away, WEF warns

DUBAI: Global economies remain at risk of further financial shocks and are ill-prepared for the coming wave of innovation and automation, according to the World Economic Forum (WEF).
The WEF’s global competitiveness report — its annual ranking of the strength of 137 economies around the world — warns that 10 years on from the global financial crisis, “the prospects for a sustained economic recovery remain at risk due to a widespread failure on the part of leaders and policy-makers to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity.
“Levels of ‘soundness’ have yet to recover from the shock of 2007 and in some parts of the world are declining further. This is especially of concern given the important role the financial system will need to play in facilitating investment in innovation,” the WEF added.
The economies of the Middle East and North Africa improved their average performance in the first half of 2017, despite challenges mainly from the decline in energy prices. The most improved country in the region was Egypt, up 14 slots to 101 in the world.
“Low oil and gas prices are forcing the region to implement reforms to boost diversification, and heavy investments in digital and technological infrastructure have allowed major improvements in technological readiness. However, these have not yet led to an equally large turnaround in the region’s level of innovation,” the WEF said.
The UAE was again ranked top of the regional rankings, at 17th, down one slot from last year. Saudi Arabia was ranked 30th, also down one position.
Qatar fell by seven positions to 25th, though the WEF noted that the report was compiled before the economic effects of the economic sanctions introduced by some of its Gulf neighbors because of allegations of terrorism funding.
“The country will have to ensure better access to digital technologies for individuals and businesses, and further strengthen educational institutions,” the WEF said.
On Saudi Arabia, the report said: “The macroeconomic environment has improved slightly after the 2015 oil price shock, but financial market efficiency has deteriorated as interest rates increased in 2016 and credit growth slowed.
“The country has stable institutions, good-quality infrastructure, and the largest market in the Arab world. Saudi executives see restrictive labor regulations as their most problematic factor for doing business: The labor market is segmented among different population groups, and women remain largely excluded,” the WEF added.
Another concern is the lack of adequately educated workers. Although tertiary enrolment is strong at 63 percent, more efforts are needed to advance the quality of education and align it with economic needs, the report said.
The UAE “continues to lead the Arab World in terms of competitiveness, but it loses one place as other countries post even larger gains,” the WEF said.
“This improvement shows the resilience of the UAE economy, in part due to increased diversification, which is reflected in its stable macroeconomic environment and its ability to weather the double shock of lower oil and gas prices and reduced global trade,” the report added.
Although the International Monetary Fund (IMF) predicts gross domestic product (GDP) growth to drop to 1.3 percent this year, non-oil growth is expected to pick up, suggesting that the country’s diversification strategy is bearing fruit. To further increase its competitiveness, the UAE will have to speed up progress in terms of spreading the latest digital technologies and upgrading education.
For the ninth consecutive year, Switzerland — home of the WEF — was judged the most competitive economy in the world, narrowly ahead of the US and Singapore, which switched positions in second and third.
Another key finding of the report is that competitiveness is enhanced, not weakened, by combining degrees of flexibility within the labor force with adequate protection of workers’ rights.
“With vast numbers of jobs set to be disrupted as a result of automation and robotization, creating conditions that can withstand economic shock and support workers through transition periods will be vital,” the WEF said.
The data also suggests that the reason innovation often fails to ignite productivity is due to an imbalance between investments in technology and efforts to promote its adoption throughout the wider economy.
Klaus Schwab, WEF founder and executive chairman, said: “Global competitiveness will be more and more defined by the innovative capacity of a country. Talents will become increasingly more important than capital and therefore the world is moving from the age of capitalism into the age of talentism.”


US tariffs trigger WTO spat escalation

Updated 19 October 2018
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US tariffs trigger WTO spat escalation

GENEVA: China, Russia and the European Union are among a string of countries asking the World Trade Organization to probe new US steel and aluminum tariffs, the world trade body said Friday.
Washington is meanwhile calling the WTO to investigate a number of retaliatory duties imposed by a range of countries, the agenda for the next meeting of the organization’s Dispute Settlement Body (DSB) showed.
The agenda for the DSB meeting set to be held on October 29 shows that the EU, China, Russia, Canada, Mexico, Norway and Turkey plan to ask for the creation of a panel of experts to review US President Donald Trump’s decision to hit them with tariffs of 25 percent on steel and 10 percent on aluminum.
Marking a departure from a decades-long US-led drive for free trade, Trump has justified the steep tariffs with claims that massive flows of imports to the United States threaten national security.
The tariff spat has escalated into an all-out trade war between the US and China and growing trade tensions between Washington and many of its traditional allies.
The US is meanwhile planning to request that the DSB create another set of expert panels to review the legality of retaliatory tariffs imposed by China, Canada, the EU and Mexico.
The requests, which follow rounds of failed consultations, mark and escalation in an ongoing showdown at the WTO around Trump’s controversial trade policies.
Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.
“Once the panel is established and composed, the EU is ready to demonstrate that the United States’ import duties are WTO-inconsistent and to obtain a ruling that condemns the US and brings relief to the EU industry,” an EU Commission spokesperson said.
The creation of a DSB panel usually triggers a long and often costly legal battle that sometimes takes years to resolve.