"No country will be spared in the case of a new financial shock in the developed countries," UNCTAD Secretary-General Supachai Panitchpakdi told the 19th CLSA Investors' Forum in Hong Kong yesterday, and warned that a renewed shock "would provoke a stream of capital flows reversals, shrinking global trade volumes and falling commodity prices with negative consequences for all."
At the invitation of Credit Lyonnais Securities Asia (CLSA), Asia’s leading independent brokerage and investment group, Dr. Supachai delivered a talk on "Global re-balancing - implications for Asia" to an audience of more than 1,500 institutional investors from 33 countries and more than 500 senior executives from 210 listed companies in the Asia-Pacific region.
CLSA Chairman and CEO, Jonathan Slone, opened the forum noting that “nearly five years after the global financial crisis began we still have no real resolution to many of the core issues facing global financial markets.” He regretted that the “ongoing crisis and the threat of unexpected consequences has become the new norm, and nothing on the horizon suggested that this will change anytime soon.”
Dr. Supachai noted that there have been several kinds of re-balancing that have occurred in recent years, the most significant of which has been the growing shift in the balance of the world economy towards a number of fast-growing developing economies which has been further accentuated by the recent financial and economic crisis, leading some pundits to speculate about a "de-coupling" of the developing world from the developed economies.
He warned, however, that downside risks in the global economy remain "alarmingly high," and with any renewed financial shock, developing countries, including the relatively robust economies in Asia, will find it difficult to sustain their growth dynamics.
Dr. Supachai also pointed to the growing trend of income inequality and rising imbalances between the richest and poorest income groups within most countries of the world, as well as between them. Global recovery, he said, is stymied by these trends which are likely to become even worse as fiscal austerity coupled with wage restraint causes further economic contraction.
A final form of re-balancing that needs to be pursued properly relates to the risks posed for the Asian region and for the global economy by the grave deficiencies in global economic governance that continue to exist in international monetary and financial markets, he said.
UNCTAD has long been concerned about the dangers of a system where international trade is organised around a multilateral rules-based system, but with no parallel multilateral monetary and financial order, he added.
Despite the latest adjustment in quotas and voting shares, IMF governance, for example, remains out of kilter with the new balance in the global economy, he said.
"The re-balancing of the global economy should also be reflected in a re-balancing of the voice of developing countries in global economic governance," he concluded.
More than 40 keynote and specialist speakers were present at the CLSA Investors’ Forum, including Member of the European Parliament Nigel Farage; Harvard University Professor, Dr Meghan O'Sullivan; proponent and lecturer of 'Big History,' David Christian; author and founder of Acumen Fund, Jacqueline Novogratz; Bad Sciencecolumnist, Ben Goldacre; former Senior Vice Chairman of Citigroup, William Rhodes; and strategist and media commentator David Roche.