LONDON: “I think the patient is stabilized,” then-US President Barack Obama declared after G20 powers prescribed unprecedented remedies to steady the crisis-wracked world economy just over a decade ago.
Today, as the world fights to immunize global growth from the coronavirus pandemic and Obama’s successor Donald Trump rips up the rulebook of cooperation, there has been no such collective response, and globalization itself is ailing.
“Trump thinks all problems are external,” Charlie Robertson, global chief economist with Renaissance Capital in London, told AFP.
“He has always been of the view that if you can just maintain external security, you’ll feel better about yourself, whether it’s to do with trade or the virus,” he said.
Trump, after pursuing a trade war with China, is waging a blame game and blindsided Europeans by banning travel from the continent to ward off the “foreign” disease.
Some countries in Europe are also shutting their borders.
“Our experience is that primarily foreigners brought in the disease, and that it is spreading among foreigners,” Hungary’s Prime Minister Viktor Orban said.
There is no scientific basis for such claims. But in concrete terms, the pandemic has exposed the reliance of many companies, from Apple to fashion chain Zara, on China as the world’s foremost production hub.
Multilateralism does appear to be in decline. This might limit coordinated responses.
Trump’s populist rhetoric and tariffs war were already forcing some companies, Apple included, to look at “reshoring” jobs back home or diversifying supplies.
The trend could deepen as the coronavirus strains or breaks supply chains centered on China, according to Vicky Redwood, a senior economic adviser at Capital Economics. “Globalization has undermined the power of national governments and been blamed for rising inequality, multinational tax avoidance and unwanted migration,” she said.
The 2008 banking crisis gave birth to G20 summits of nations including China to determine collective measures.
Fast-forward to earlier this month, when the more select group of G7 economies vowed to use “all appropriate policy tools” to protect world growth against the epidemic.
Despite a lack of specifics, financial markets hoped that meant concerted action was coming.
But just hours later the US Federal Reserve surprised observers with an emergency rate cut. Other changes to monetary policy came only later, including from the Bank of England, and the European Central Bank is still holding its borrowing rates in place.
Only on Friday did the G7 nations decide to hold a videoconference on Monday to coordinate action against the coronavirus.
“Multilateralism does appear to be in decline. This might limit coordinated responses,” Redwood said.