Looming world recession likely to hit by next year, Nobel Prize Laureate warns

Economist Paul Krugman says recession likely by next year at the latest. (AFP/File)
Updated 12 February 2019
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Looming world recession likely to hit by next year, Nobel Prize Laureate warns

  • Krugman says there is a major backlash against globalization
  • Policy makers seem unaware of the concerns voiced by people, Krugman warns

DUBAI: The world will likely enter a recession by next year as the backlash against globalization continues to grow, economist Paul Krugman predicted on Monday.

Speaking at the World Government Summit in Dubai, Krugman warned that world was witnessing a landscape of stagnant wages, growing inequalities, and a loss of confidence in the world’s business leaders which in turn led to a populist backlash against globalization.

“The result is clear: forward motion on globalization has stopped, but it was slowing anyway,” Krugman said.

And he said there is “quite a good chance that we will have a recession late this year or next year.”

He said there was a general lack of preparedness among economic policymakers.

“The main concern has always been that we don’t have an effective response if things slow down…we don’t seem to have a safety net.”

Krugman said central banks lacked the tools required to protect against market turmoil, and planning for risk has been minimal.

Instead, trade wars and growing protectionism continue to dominate policy agendas, deferring attention and resources from what should be the real priorities.

“I don’t see the iceberg out there, but if we do hit one, I know for sure this liner is not unsinkable,” Krugman said, comparing the global economy to the Titanic.

He said people felt short changed by the previous generation of economic growth, but he said those discussing a solution seemed not to be touching on the issue.

“The question is what they want as the solution…turns out that’s not as clear,” Krugman said, highlighting what he called the gap leaders needed to fill in order to avert another “Great Depression.”

On what many are calling the Fourth Industrial Revolution, Krugman warned that, contrary to popular belief “technological change is actually relatively sluggish right now.”

And he said he doubted the claims that technology was so advanced it would soon change the way we work and live, adding “this is not a transformative revolutionary era.”

Krugman concluded that despite the technological advancements of the last 25 years, the way we work “had not changed all that much.”


US intelligence says Huawei funded by Chinese state security: report

Updated 20 April 2019
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US intelligence says Huawei funded by Chinese state security: report

  • The accusation comes at a time of trade tensions between Washington and Beijing
  • Huawei dismissed the allegations

US intelligence has accused Huawei Technologies of being funded by Chinese state security, The Times said on Saturday, adding to the list of allegations faced by the Chinese technology company in the West.
The CIA accused Huawei of receiving funding from China’s National Security Commission, the People’s Liberation Army and a third branch of the Chinese state intelligence network, the British newspaper reported, citing a source.
Earlier this year, US intelligence shared its claims with other members of the Five Eyes intelligence-sharing group, which includes Britain, Australia, Canada and New Zealand, according to the report.
Huawei dismissed the allegations in a statement cited by the newspaper.
“Huawei does not comment on unsubstantiated allegations backed up by zero evidence from anonymous sources,” a Huawei representative told The Times.
The company, the CIA and Chinese state security agencies did not respond immediately to requests for comment.
The accusation comes at a time of trade tensions between Washington and Beijing and amid concerns in the United States that Huawei’s equipment could be used for espionage. The company has said the concerns are unfounded.
Authorities in the United States are probing Huawei for alleged sanctions violations.
Meng Wanzhou, Huawei’s chief financial officer and daughter of its founder, Ren Zhengfei, was arrested in Canada in December at the request of the United States on charges of bank and wire fraud in violation of US sanctions against Iran.
She denies wrongdoing and her father has previously said the arrest was “politically motivated.”
Amid such charges, top educational institutions in the West have recently severed ties with Huawei to avoid losing federal funding.
Another Chinese technology company, ZTE Corp. , has also been at the center of similar controversies in the United States.
US sanctions forced ZTE to stop most business between April and July last year after Commerce Department officials said it broke a pact and was caught illegally shipping US-origin goods to Iran and North Korea. The sanctions were lifted after ZTE paid $1.4 billion in penalties.
Reuters reported earlier this week that the United States will push its allies at a meeting in Prague next month to adopt shared security and policy measures that will make it more difficult for Huawei to dominate 5G telecommunications networks.