The world economy is beset by problems such as high unemployment and rising prices, which could fuel trade protectionism and even lead to war within nations, the head of the IMF warned yesterday.
Rising food and fuel prices in recent months have already hit poorer countries and are one of the factors behind massive anti-government protests in Egypt and in Tunisia.
“As tensions between countries increase, we could see rising protectionism — of trade and of finance. And as tensions within countries increase, we could see rising social and political instability within nations — even war,” Dominique Strauss-Kahn said in a speech in Singapore.
Strauss-Kahn said two “dangerous” imbalances that he said could sow the seeds of the next crisis.
The first was the unbalanced recovery across countries, as emerging nations grow much faster than developed economies and possibly overheat. The second was the social strains within countries with high unemployment and widening income gaps.
Over the next decade, 400 million young people would join the global labor force, posing a daunting challenge for governments, he said.
“We face the prospect of a ‘lost generation’ of young people, destined to suffer their whole lives from worse unemployment and social conditions. Creating jobs must be a top priority not only in the advanced economies, but also in many poorer countries,” he said.
“The pre-crisis pattern of global imbalances is re-emerging,”he said.
“Growth in economies with large external deficits, like the US, is still being driven by domestic demand. And growth in economies with large external surpluses, like China and Germany, is still being powered by exports,” he said.
He said the IMF expected subdued growth of 2.5 percent for advanced economies this year as high unemployment and household debt weighed on domestic demand. Emerging markets would grow at a faster pace of 6.5 percent, with Asia, excluding Japan, expanding by 8.5 percent, he said.
Strauss-Kahn said the “global growth gap” was straining the recovery in other ways, with energy prices rising swiftly, reflecting the rapid growth in emerging economies.
“Food prices are rising too — though here supply shocks are the main reason with potentially devastating consequences for low-income countries. Together, these price increase are beginning to feed into headline inflation,” he said.
He also said the IMF was ready to help Egypt and other nations stricken by chronic unemployment.
Strauss-Kahn said he did not want to comment on the turmoil in Egypt, but “clearly the situation in Egypt is the kind of situation that could have been expected not only in Egypt, when you see the problem created by the high level of unemployment,” he told a questioner after giving a speech.
“Now the question is how to rebuild this, that’s not only true for Egypt, [it] can be true also for countries where you didn’t have this kind of unrest but are almost in the same situation,” he said. “And of course the IMF is ready to help in defining the kind of policy that could be put in place.”
ADDITIONAL REPORTING BY AFP
A Ministry of Foreign Affairs official yesterday said that a delegation that visited China for an APEC meeting did not receive any kind of treatment that downgraded Taiwan’s sovereignty. Department of International Organizations Director-General Jonathan Sun (孫儉元) said that he and a group of ministry officials visited Shenzhen, China, to attend the APEC Informal Senior Officials’ Meeting last month. The trip went “smoothly and safely” for all Taiwanese delegates, as the Chinese side arranged the trip in accordance with long-standing practices, Sun said at the ministry’s weekly briefing. The Taiwanese group did not encounter any political suppression, he said. Sun made the remarks when
PREPAREDNESS: Given the difficulty of importing ammunition during wartime, the Ministry of National Defense said it would prioritize ‘coproduction’ partnerships A newly formed unit of the Marine Corps tasked with land-based security operations has recently replaced its aging, domestically produced rifles with more advanced, US-made M4A1 rifles, a source said yesterday. The unnamed source familiar with the matter said the First Security Battalion of the Marine Corps’ Air Defense and Base Guard Group has replaced its older T65K2 rifles, which have been in service since the late 1980s, with the newly received M4A1s. The source did not say exactly when the upgrade took place or how many M4A1s were issued to the battalion. The confirmation came after Chinese-language media reported
The Taiwanese passport ranked 33rd in a global listing of passports by convenience this month, rising three places from last month’s ranking, but matching its position in January last year. The Henley Passport Index, an international ranking of passports by the number of designations its holder can travel to without a visa, showed that the Taiwan passport enables holders to travel to 139 countries and territories without a visa. Singapore’s passport was ranked the most powerful with visa-free access to 192 destinations out of 227, according to the index published on Tuesday by UK-based migration investment consultancy firm Henley and Partners. Japan’s and
BROAD AGREEMENT: The two are nearing a trade deal to reduce Taiwan’s tariff to 15% and a commitment for TSMC to build five more fabs, a ‘New York Times’ report said Taiwan and the US have reached a broad consensus on a trade deal, the Executive Yuan’s Office of Trade Negotiations said yesterday, after a report said that Washington is set to reduce Taiwan’s tariff rate to 15 percent. The New York Times on Monday reported that the two nations are nearing a trade deal to reduce Taiwan’s tariff rate to 15 percent and commit Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to building at least five more facilities in the US. “The agreement, which has been under negotiation for months, is being legally scrubbed and could be announced this month,” the paper said,
RSS