Speed bumps ahead
The world’s economy is certainly hitting speed bumps right now in year 2020. Almost all the world’s major economies encountered negative GDP growth. The global spread of the Covid-19 disease coupled with oil price crash have wreaked havoc on the world’s economies. The retreat of globalisation championed earlier by the Trump’s administration was further accelerated by this black swan event.
For a start, the global pandemic put the movement of people close to a halt. This has serious implications on both the international trade and the industries and jobs that it supported. Suffice to say that in any prolonged pandemic situation in which each country will close their own borders, it could only lead to massive financial and job losses. Industries that benefit from global market and movement of people such as the travel and tourism sectors, MICE, retails, accommodation and lodgings, hospitality services will be seriously affected. With low to zero tourists arrival, international events and meetings just would have to be cancelled.
On another different front, global oil supply glut was further worsened by the oil price war between the oil cartel OPEC and Russia. Disagreements over the way forward led Saudi Arabia to pursue market share at the expenses of profits and others. The WTI benchmark is already now hurdling closer towards a $20 per barrel not unlike that in 2014, the year when the oil price first crashed. All the International Oil Companies, National Oil Companies, Independents and services had already planned and or cut capital expenditures and even delayed projects and abandoned un-profitable assets due to low oil price. This would have major consequences on the jobs and also the industries that it supported.
In all likelihood, these two un-related events could result in another global financial crisis. All countries should coordinate and work together to prevent the worst from happening. This could be done at both the global and regional levels, and it is especially during this tough period that the big major economies would also have the opportunity to lead and to take initiatives going forward.
Economic stimulus such as those announced by Singapore’s government are very much welcome as they could help prevent severe job losses and to arrest the downward spiral forces caused by the global pandemic and oil price crash. As each country will try to administer and grapple with its own issues, future global movement of goods could be affected. If each individual country behave selfishly, and took the dramatic steps to stockpile their own supplies, cross-border movements of foods and basic goods could be affected. This is worrisome and could encourage people and nations to make a run for supplies and stocking up, which will further lead to the rapid running out of global foods and supplies.
In such dire situation, it is thus important for leaders to be able to calm the people, provide direction and leadership while simultaneously working behind the scene to ensure that the social, political and economic system do not collapse.https://straitsjournal.com/speed-bumps-ahead/GlobalLatest ThinkingPoliticscovid19,crash,economic,globalisation,oil,pandemicThe world's economy is certainly hitting speed bumps right now in year 2020. Almost all the world's major economies encountered negative GDP growth. The global spread of the Covid-19 disease coupled with oil price crash have wreaked havoc on the world's economies. The retreat of globalisation championed earlier by...escveritas [email protected]AdministratorThe Straits Journal