The bearer of bad news or one who isn’t afraid to tell it like it is? Dambisa Moyo gives a glimpse of the future of global economy and its challenges.
Back in 2008 the global economy began to suffer recession. While things have greatly improved, some economists say we are heading for another recession. Dambisa Moyo is one of them. She spoke about what it is going to take for governments to succeed in the world that is heading towards another global recession.
Dambisa begins her talk by telling the audience that she is going to be the bearer of bad news. “I’m afraid I’m going be the person who is going to come and be a bit of a downer and tell you what I see is the biggest risk to the world economy, which is that I think we’re entering into a very severe global recession and possibly a depression,” she says.
A hush fell over the room. The words recession and depression, when used in conjunction with the word ‘economic’, tend to bring stunned silence. Dambisa acknowledged that everyone knows what happened in 2008, when the global economy fell. “What is it that’s happening around the world that we’re kind of ignoring? And in five or maybe ten years we are going to hit our foreheads and say, ‘How could we not have seen it, it was so obvious?” she says. What we will not have seen is the global economy falling like it did in 2008.
World is becoming increasingly unstable.
She believes that most people will not see the depression in the economic global economy that is coming. She also believes that democracy is on the decline and there will be significantly more geopolitical risks around the world. Across the emerging markets, where 90 percent of the world’s population lives, growth rates are on the decline. She cites examples. In places like Russia and South Africa, where populations are at least 50 million, growth rates are hovering around 1.7 to 1.9 percent. That is significantly lower than the seven percent minimum economic growth rate that is needed to make a dent in poverty. “This, ladies and gentlemen, is why if you look around the world today, there’s a lot more political volatility,” she declares.
Dambisa backs up her claims with evidence that the “world is becoming increasingly unstable.” The Horizon 2050 report predicts that 80 percent will live in a fragile or politically unstable state by 2020. The Economist Intelligence Unit predicted this year that 64 countries will experience political and social unrest.
Emerging markets are not the only regions where the economy is sluggish. She tells the audience that many of them know that the European economy has been at high risk of entering the third recession since the financial crisis in 2008. Recently, British Prime Minister David Cameron warned of a second global economic crash.
It’s all about creating growth.
Public policy makers struggle with the pressure of populations that want to see economic growth and improvements in living standards and reduction in poverty at a time when governments are not able to do so. The reason is that the tools, that have been used in the past to drive economic growth, are not working. “They are impotent,” in the words of Dambisa.
So, what does this all mean for the world and particularly for developed countries? It means that governments need to stop looking for short term solutions to long term problems. It means that western leaders must first deal with the problem of growth before they can tell emerging economies to adopt a democratic form of government. It means governments must adopt longer terms of office so that re-elections don’t punctuate policy implementation. It means that politicians and elected officials should meet higher entry standards to prove their capability to lead complex administrations. In short, it means that western governments need to reform their elective processes to retool and rediscover democracy.
Key points from the session:
- Know that the world is becoming increasingly unstable. Democracy is on the decline and there will be significantly more geopolitical risks around the world. Across the emerging markets, where 90 percent of the world’s population lives, growth rates are on the decline.
- The world is heading for another global recession. Across the emerging markets, growth rates are declining. The European economy is showing signs of another recession.
- It’s all about creating growth. Western governments need to reform their elective processes to retool and rediscover democracy. Governments must adopt longer terms of office so that re-elections don’t punctuate policy implementation.
Zambian native Dambisa Moyo is one of the world’s leading economists. She worked for Goldman Sachs, and worked almost a decade as a consultant for the World Bank in Washington, D.C. Time Magazine named her One of the 100 Most Influential People in the World. She is the author of three books: Dead Aid, How the West Was Lost, and Winner Takes All.