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
0

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.”


Turkey set to begin oil and gas drilling off Cyprus

Updated 21 February 2019
0

Turkey set to begin oil and gas drilling off Cyprus

  • “In the coming days we will start drilling with two ships around Cyprus,” Turkish foreign minister said
  • Turkey and the Cypriot government have overlapping claims of jurisdiction in the eastern Mediterranean

ISTANBUL: Turkey will begin drilling for oil and gas near Cyprus in coming days, state-owned news agency Anadolu reported Foreign Minister Mevlut Cavusoglu saying on Thursday, a move that could stoke tensions with neighboring Cyprus and Greece.
Turkey and the internationally recognized Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas.
“In the coming days we will start drilling with two ships around Cyprus,” Cavusoglu was quoted as saying in a speech to a business conference in western Turkey’s Aydin province.
“Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing at all can be done in the Mediterranean without Turkey, we will not allow that,” Cavusoglu said.
Turkey launched its first drillship “Fatih” in October to drill off the coast of Turkey’s southern Antalya province. It said a second ship that it purchased would operate in the Black Sea, but was diverted to the Cyprus area.
Breakaway north Cyprus, which is supported by Turkey, says any offshore wealth also belongs to them, as partners in the establishment of the Republic of Cyprus in 1960.
The island was divided in 1974 after a Turkish invasion triggered by a brief Greek-inspired coup. Countless peacemaking endeavours have failed, and offshore wealth has increasingly complicated peace negotiations, with Greek Cypriots saying the matter is not up for discussion.