Brexit, rising populism across Europe, the ascent of Republican presidential candidate Donald Trump in the US and the backlash against income inequality everywhere.
A slew of political and economic forces have nurtured a growing narrative that globalization is now on life support — a potential game-changer for global financial markets, which have staged a rapid expansion since the end of the Cold War thanks to unfettered cross-border flows.
No more: Trade volumes have stalled while the “politics of rage” has taken root in advanced economies, driven by a collapse in the perceived legitimacy of political and economic institutions, a new report from Barclays PLC said.
The result, the bank said, is an oncoming protectionist lurch — restrictions on the free movement of goods, services, labor and capital — combined with an erosion of support for supranational bodies, from the EU to the WTO.
“Even mild de-globalization likely will slow the pace of trend global growth,” Barclays head of European FX strategy Marvin Barth wrote in the report.
“A sense of economic and political disenfranchisement due to imperfect representation in national governments, and delegation of sovereignty to supranational and intergovernmental organizations” has generated the backlash, he said.
He cited as a major factor the collapse in support for centrist parties in advanced economies and added that the role of income inequality might be overstated.
The report echoes Harvard University economist Dani Rodrik’s earlier contention that democracy, sovereignty and globalization represent a “trilemma.” Expansion of cross-border trade links — and the attendant increase in the power of supranational authorities to adjudicate economic matters — is a direct threat to representative democracy, and vice-versa.
The veto on Monday of the EU’s free-trade deal with Canada by the Belgian region of Wallonia — whose leader said the deadline to secure backing for the deal was “not compatible with the exercise of democratic rights” — is a sharp illustration of this trilemma.
Barth paints a sweeping picture of the global investment landscape in this new era.
Barclays is not the first bank to paint this picture — Bank of America Merrill Lynch (BofA Merrill Lynch) earlier this month said that recent “events show nations are becoming less willing to cooperate, more willing to contest.”
Looser fiscal policy, trade protectionism and wealth redistribution could unleash a wave of inflation, BofA Merrill Lynch said, recommending that investors snap up real-economy assets to hedge against a “war on inequality.”
David McWilliams, a former economist for Ireland’s central bank, wrote in an Oct. 14 article that the backlash against globalization represents an especially major shift for the US Federal Reserve and its policies.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
‘FAILED EXPORT CONTROLS’: Jensen Huang said that Washington should maximize the speed of AI diffusion, because not doing so would give competitors an advantage Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) yesterday criticized the US government’s restrictions on exports of artificial intelligence (AI) chips to China, saying that the policy was a failure and would only spur China to accelerate AI development. The export controls gave China the spirit, motivation and government support to accelerate AI development, Huang told reporters at the Computex trade show in Taipei. The competition in China is already intense, given its strong software capabilities, extensive technology ecosystems and work efficiency, he said. “All in all, the export controls were a failure. The facts would suggest it,” he said. “The US
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
French President Emmanuel Macron has expressed gratitude to Hon Hai Precision Industry Co (鴻海精密) for its plan to invest approximately 250 million euros (US$278 million) in a joint venture in France focused on the semiconductor and space industries. On his official X account on Tuesday, Macron thanked Hon Hai, also known globally as Foxconn Technology Group (富士康科技集團), for its investment projects announced at Choose France, a flagship economic summit held on Monday to attract foreign investment. In the post, Macron included a GIF displaying the national flag of the Republic of China (Taiwan), as he did for other foreign investors, including China-based
RSS