Understanding the Global Economy: Insights from Leading Economists

I am not an economist I I know a little bit about geopolitics and a little bit about environmental sustainability and

not too much about the global economy but that's okay because these gentlemen do know quite a lot about the global

economy let me introduce our panelists on my left I have um Frederick Ericson he is the founding director of the

European Center for international political economy uh he's uh he's a published author one of his books is

called The Innovation illusion and I understand you're working on a new book about about machine technology and kind

of where it wants to go and where it's going to take us whether we like it or not is that uh more or less correct um

next to him is is Bill Lee bill is the chief Economist of The milikan Institute he spent a

number of years at City Bank and as an economist there he did his his earlier work at the international monetary fund

and at the uh Federal Reserve in the United States he's got his PhD from Colombia next to him is Dr cow Dr C is

the vice chairman and Secretary General of the Shanghai development Research Foundation uh he's also an adviser to

the Ministry of Finance in China and truly one of China's best economists and next to him is Martin Rado he is a

visiting professor at Florida International University if I have that correct uh Martin he is uh has been the

president of the Central Bank of Argentina he's worked for the World Trade Organization for the World Bank

he's also venture capitalist and he's a graduate of of Harvard so you know with these four uh gentlemen I think we can

really do a good job of understanding the global economy and I'll start right away with with perhaps you know the

biggest issue for here you know outside the window in the hotel you can you know you can see China across the Yellow Sea

uh what what is happening with the Chinese economy if if I understand it properly depending upon whether you look

at purchasing power parity or or or or or dollars China is the first or the second economy of the world um something

about a housing bubble something about data not coming from the Chinese government uh Dr C what what what do you

see happening in the Chinese economy in the next uh in this year and in the years after that and what impact might

have have for the world and South Korea yes thank you so much thank you for your nice

introduction actually uh it's second time for me to attend the uh World Knowledge Forum I feel um very good uh

be back um you know yesterday I I've been uh attending many uh sessions I feel uh China seems is a big elephant in

the house uh everybody you know take care of uh China the my simple uh summarize the performance of

Chinese economy uh until now in 2024 uh is mixed uh because government uh set the target for GDP growth uh for this

year is around five uh% uh actually in first quarter the GDP growth in China is

5.3% but the second quarter only 4.7% so my feeling is

5% growth rate is achievable but governments should do more I mean carry more expansion physical and monetary

policy uh as a monetary say the big issue now uh is housing uh or real estate uh Market in China uh in past two

or three years investment or sales in real estate market has been down uh the issue is I guess the situation in China

has been different uh from that happened in US many years ago in

us the if real estate market come down it will have a tremendous impact on banking

sector because the down pay payment in US is very low limited sometime even zero down payment but in China usually

the town payment for mortgage loan very high even 40% even 50% until several months ago government uh reduced the

down payment to 30% so that way not necessarily Chinese are very rich because they accumulate a

funding from several generation to pay down down payment but they must be very unhappy if they're housing if they've

paid the down payments and the houses are worth less money yeah the the issue is because the down side of real estate

market have a tremendous impact on uh local government because the uh in the revenue for local government most from

sale of land now the sale of land tremendous reduce also plus the the

expense uh for pandemic several years ago so that's the I guess Bigg is so so so Bill if I understand Dr C is saying

5% growth is possible but the banking sector is okay but consumer confidence is going to go through the floor yes

local how do you see the the Chinese economy bill I I think we in the west are often characterize China as

suffering from I think you need to hold the mic a little bit closer the three daunting D's right you you have dismal

demographics dis uh daunting debt and and and deficient demand and all of that I think is tied up to the property

markets you're absolutely right but the one thing that I would want to emphasize is that everyone says you need to do

more fiscal policy and if you do more fiscal policy that means you have to spend more issue more debt trouble is

the the local governments are so indebted now their their official debt is about 35% of GDP The Unofficial debt

the local government financing Vehicles is about 45% of GDP so there alone you're almost 100% of GDP and and and

the MRI right when they created MRI uh and the and the Euro area they said keep debt to less than 60% of GDP so so so

China even on the local level not even counting the central government is so indebted it cannot do the n needed

fiscal policy to push up demand to get you to 5% growth and now Martin Martin in Latin America China has enormous

quantities of debt to Latin American countries and and China's very much engaged with with Latin America is if

China gets a cold if China has problems is that going to impact Latin America or is or is it kind of safe well uh Latin

America has two key variables that is very much dependent on one is interest rates in the US and the other is

commodity prices uh in terms of uh the opportunities that you have for fortunately we are on the verge of a

commodity boom that is not based on what happened at the beginning of the years 2000s which was the industrialization of

China that led to a lot of uh very strong demand for industrial Commodities and agricultural Commodities now there

are three key trends in Latin America that are going in our Direction one is energy transition the second one is

energy security and the third one is food security around the world the demand in terms of green energy and the

demand of for energy transition is going to be so strong in the next decades this is not a question of just one decade but

uh clearly when you look at for example the lithium triangle down in South America which is composed by Chile

Bolivia and Argentina uh it has a relative Advantage for example relative to Australia in Australia you extract

lithium from rocks in uh the uh this Golden Triangle you extract lithium from salt from Salt uh salt uh sort of flats

where you evaporate the salt so clearly the there is a competitive advantage in salt in I'm sorry in lithium in Copper

in Copper uh we provide almost 60% of well copper and as you know lithium ion batteries basically carry uh um lithium

and carry copper and mang GES so although China is very important in terms of what it providing as a source

of demand it is not the only source of demand and there are the these three key Mega trends that are going on in the

world uh not only I say uh energy transition the green economy but also uh energy security and you have for example

LG natural gas which is one of the critical elements in the transition we won't have uh green energy or hydrogen

energy uh it's it's costly and one of the key transitions could be done by LNG by liquid natural gas which is provided

for example from Mexico to down to Argentina Argentina has the second largest basing uh for second largest

basing in Shell gas in the world which is called in Spanish bakam it's not a good name in that mean that means dead

cow if I my Spanish cow I would say it's it's a cow that is very much alive because it's producing liquid natural

gas and for example one of the big investments from Asia in Latin America is petronus petronus the Malaysian

company that is projecting a u a pipeline coming from bakam down to the Atlantic and producing a a liquefication

plant to export not only to to Asia exactly so so so you say Latin America is is is not dependent upon China so

much so it is China dependent but not so much there are the these three forces that are now in the world again energy

transition energy security and food security are providing other sources of demand rather than China and interest

rates it's another uh important area because Latin America is dependent on uh flows on Capital flows from the rest of

the world so lower interest rates will mean more flows not only to Latin America I would say to all Emerging

Markets well let me stay with you just for a minute Martin because you used to be a central Banker now now I'll get to

you Bill in a minute the American economy while we are here at this this this debate stage we have the you know

um Donald Trump is talking to Camala Harris in Pennsylvania uh I think uh I will be leaving this stage to go watch

whatever happened there on on on the video um what do you think is going to happen to the American economy depending

upon who wins and and where is the Fed in this whole story well I think that the FED is much more critical than the

American economy and let me give you a biased if you could hold the microphone a little bit closer yes a biased answer

as as a former Central Banker uh the FED in my view got it wrong uh at the beginning of the of the pandemic I think

one of the biggest mistakes in political economy in history was calling uh inflation a transitory phenomenon in

particular in the US and this came out in the fomc that is in the reports of the Federal Open Market Committee and as

you've seen uh again it was an unprecedented shock to the the world economy uh but the massive the massive

inflow of monetary policy the massive inflow of fiscal policy all done together was a critical element that

never happened before also because we were all uh in our houses and we were all uh confined this uh this amount of

money was basically uh channeled into into goods and not into services so we had uh that that uh concept that all

this flood of money helicopter money that we had from fiscal push you know uh the uh the treasury giving out checks to

all people that were in the houses in their houses to many companies many companies unfortunately that were paper

companies so we had a clearly a great fiscal expansion with a monetary expansion uh cons at a greatest speed at

a fantastic speed that we've never seen before so inflation was a natural CA that the FED didn't didn't catch at the

beginning I think they were too late to the game what we've seen is a phenomenal in a short period of time in 12 months

we had a rise from zero to 5.5 5.25% it is unprecedented we have to look to the decade of the 80s to see

that kind of rise and that has hurt the American economy in terms of the recovery my point now is will the FED

get it too late at this point in terms that the key question in the US economy is the Slowdown and the Slowdown that we

have seen in the labor market for example if you look at the July meeting of the Federal Open markets committee

there you had already that the labor market was clearly quite uh with quite a slack two days before we had the

increase in unemployment from 4.1 to 4.3% the FED met and it didn't move interest rates in my in my view and uh

you know they should have done it at that point and now they are running behind the curve in terms that the key

risk for the US economy is not only a Slowdown but also a recession my point is that probably the US the the US fed

will react we are in an electoral period we will see at the next meeting of September 17 and 18 of the fomc my point

is that they should uh start decreasing interest rates at around a rate of 50 basis points probably because they are

running behind the curve but most important Mike is not only what they do on September but also forward guidance

as a central Banker is very important that you give the private sector where where where you're going The Horizon so

it's very critical that the FED comes out with a forward guidance of what are the next steps uh in my view what the US

needs at this point is at least 100 basis points coming down of the and Martin just to be clear a basis point is

100 so when you you're talking about half a percent or or 1% that's right how do than you for the clarification

I'm Sor let me let me let me let me just get in here for a second um thank you um when when you know B how do you see the

American economy what's going to happen in this election how does it impact it when I first started as a professional

Economist I spent my time at the Federal Reserve and when I went to the IMF they put me in charge of the US desk and they

said you know you're going to have the hardest job at the IMF and why is that because all these economists that we

have here these International economists from from Argentina from from from Asia they're all trained in the US and they

know so much about the US economy they the the newspapers report exclusively about the US economy so everybody's a US

expert right everybody's an expert on the US economy so so let me let me just set the framework for what's normal in

the US economy number one all right the unemployment rate between four and 4 and a half% is considered normal that's in

about most people's estimate of the natural rate that's where the economy would be if we're growing at the natural

rate of growth which is about one and a half to 2% um and the FED is now targeting inflation to come down to

about 2% and when when when you people say oh my God we're in a recession because we went half a percentage point

up on the unemployment rate three and a half to four and a half percent a huge jump increase there was no layoffs

nobody was laying off people the reason reason why the unemployment went went up was because so many people said wow

opportunities are good now I should go and look for a job and more and more people started looking for a job so to

say that the US economy is teetering on a recession or even in a recession is ridiculous that's number one I I think

Mr Trump will probably be saying that right now but let's not get too deeply into this because otherwise we're not

going to get it through the rest of the world to characterize US economy I think to fairly characterize it at least in in

this expert's opinion it's it's doing very well extraordinary well it's been growing at way above potential uh for

for several years now because it's rebounded rightly because Martin said so much stimulus was put into the economy

fiscal policy going forward only has two characteristics one is from the inflation reduction act which is badly

named because it didn't reduce inflation all it did was reshaped Medical Care and and the chips act which is an industrial

policy in the part of United States to try to bring back a lot of manufacturing especially of high-end semiconductors

into the United States that's where fiscal policy is right now it's not doing anything other than reshaping the

US economy it it is it is actually overstimulating as as Martin said the US economy monetary policy is set at a

short-term objective of bringing inflation back to 2% and it seems to be have done that but I think for Korea the

most important part about the US economy right now is what's happening to the trade policy because as you know right

Mr Trump is I love tariffs that that's the one campaign that he did from 2016 onward

um and and Biden and Harris have said H we don't like tariffs but they're okay all of you have taken econ 101 econ 101

you say tariffs are terrible tariffs distort tariffs make you worse off tariffs raise inflation tariffs lower

growth how much the tariffs Chang us growth 3% over two years 3% how much did it raise prices consumer prices hardly

at all hardly at all because a lot of it was absorbed in profit margins now I think one of the things that you have to

learn Beyond econ 101 is that we don't live in a world of free trade we live in a distorted world so what the Tariff

policy is trying to do across countries is to try to reshape your own economy you're trying to subsidize certain

certain industries and you're trying to to prevent people from overc consuming other sectors so so it's really shifting

consumption and shifting production the the first thing you learn about tariff when you take International economics

which I used to teach at Columbia was tariff is a consumption tax and a production subsidy right those are two

things and it generates Revenue generates Revenue we don't have time for your lecture but but I'm just saying the

message here is Right tariffs are not necessarily a bad thing they can be used wisely if they are us well Trump wi the

election more tariffs are coming Frederick from a European perspective how do you see the American economy

what's going to happen well I mean first of all I mean if we if we look at the broad um orientational trade policy I

think I mean the the main answer to the question why didn't Trump's uh increase in tariffs why didn't fuel consumer

prices more Why didn't it fuel um inflation more well partly because it was mostly bilateral um and that's what

we know from trade policy which is that if you go against one country it may be a big country like China and you raise

tariffs on export from that country what you're going to do is reshuffling of trade the the export you used to get

from China is now going to come from other countries and this is what we've seen in American Trade data however what

the main tariff man as he now labels himself um Mr Trump he wants to raise taxes on all use trade it's not just

about China anymore he wants to have a 10% tariff on trade with Europe 10% tariff on trade with Latin America and I

can assure you that is going to have an inflationary impulse in the economy that's going to have consequences for

both raising uh consumer prices in America and of course reducing export competitiveness of us firms because a

lot of this import is is going to American manufacturers that then re-exports uh what they import to the

rest of the world so I would be more careful about sort of that Trend in American policy and mind you um what

Trump is saying is that he wants to go back to the 19th century tax code In America which is to erase all all

federal income tax and substitute that with tariffs and that of course means that you need to have a giant increase

in tariffs in order to affect it I think I don't think it's possible to achieve that but Fredick while you have the

microphone maybe you can talk a little bit about the European economy we've talked about the Chinese economy we've

talked about the American economy 5% for China three 2 and a half% for the US what do you see happening in in Europe

well now we're really going into dark territories um um no I I I mean cyclically um Europe has been uh

for all um purposes in what we can call the recession and that of course been true for a large economy like the German

economy which represents uh more than onethird of the entire Eurozone economy uh it's been weighed down by

first the pandemic uh by uh the war in Ukraine which had a huge impact on Energy prices and of course it's still

going on two and a half years in yeah yeah it it does but I mean the the the energy price impact that came uh on the

heels of of Russia's invasion in in into Ukraine I mean that's been um weakening AB that's been absorbed it's been

absorbed and energy price has G has gone down but I mean the major problem for Europe is not the cyclical short term

it's it's the fact that U its long-term Outlook isn't very very good we had just um um uh two days ago the former

president of the European Central Bank Mario d coming out with a very very Stern uh depressing analysis of the

European economy uh where it's basically going to say that unless you do my program which is pretty Radical by

European standards you're first going to feel Agony and then pain and you know that's the former Central

Bank um uh president talking here uh which is that Europe is on a long-term path of very very weak underlying growth

weak GDP per capita growth weak productivity growth weak uh performance in the R&D sector weak performance in at

the same time Europeans are happy they they have a high a high standard of living amazing Health Care long

vacations I mean what's what's wrong with that well I mean long mations that may be true but I don't think Europeans

are happy I think we are seeing a lot of resentment a lot of frustration at at the ballot boxes and we've been doing

that for quite some time I think um the rise of populism plus many other things which of course happens both on the

right and the left is certainly a result of the fact that we live in a European economy with uh low economic

opportunities where we almost are permanently demoted to have low economic expectations difficult to get a place to

live a house if you're a young person unemployment among young people are pretty high we see demographic

developments are not going to be uh helping us much because we're going to push up

uh cost for pensions and push for cost for healthare while we don't we don't have sort of enough labor in order to

substitute for those going into retirement so I'm pretty pessimistic about the European economy now now now

as you gentlemen talk about China the United States and and Europe it it almost seems and especially if you read

the the the the press and listen to the speeches that we're moving to some kind of a a new world order with trade blocks

which don't talk to each other almost orwellian in its in its but but I understand if you look at the

trade data there's still enormous quantities of World Trade going all around the world absolutely are we at

the end of globalization as we know it or is that just a a a political smoke screen and really the

data doesn't support that I I'll go to all of you I think all of you might have an opinion on this one but if I just I

mean I mean I think it's political smok screen uh what is true is that when you look at trade in manufacturers trade in

Goods it's been basically going sideways since um 2014 2015 but that's not surprising given that we are in a

structural shift in the entire global economy where we go towards services and we go to board much more Tech oriented

type of crossborder uh flows and crossborder exchanges and when we start to look at this world of new

globalization how knowledge ideas patents Technologies uh Digital Services AC Crossing Borders I think we are on

the verge of a new boom of globalization it's just that a lot of people talking about it and sort of predicting the end

of globalization they are they are staring at all globalization they're staring at sort of all trading data let

me go from you to Martin and then to Dr cow and then back to bill Martin go ahead well there is a new globalization

and this new globalization is given by the concept of fren Shoring near Shoring or Allied Shoring that is to say what

happened with the uh Russia invasion to Ukraine with the pandemic is that companies want suppliers to be reliable

so what you have at this point is companies that are looking for suppliers that are closer that are reliable that

will have long-term cont contracts so for example in the case of china and its relationship with the US what you have

seen is a diminishing of uh around 5% of uh Chinese export to the US but in wisely enough the uh the trade between

China and Mexico Mexico is used as a key supplier of the US has increased by almost that amount or most so what you

see now is Chinese uh Investments going into Mexico in order to supply the United States so there is a different

type of globalization and that is given by the type of suppliers that you get interestingly enough you mentioned Mike

the IRA the inflation Recovery Act which are nothing nothing to do with inflation but was mainly a uh the new green deal

right disguised do something else it was a green deal basically I mean basically giving subsidies to companies that

produce uh 80% of their products of their goods that go into the green economy but interestingly enough with

countries that have already free trade agreements with the United States that is to say if you produce a lithium

battery that is done in Chile or in Peru or in Mexico that has already a Free Trade Agreement you got the subsidy of

$7,500 of a car when you buy it in the United States so I would say that there is a different globalization that there

is a different view of suppliers and also what is over is the big trading agreements okay the the big uh sort of

free trade agreements that we've seen of the European Union uh free trade agreements with different blocks we have

had trouble getting pass a trade agreement between the European Union and mercosur which is Brazil Argentina

Uruguay and um uh and Paraguay so big trade deals are over it's more localized focused on the kind of supplier one last

word about what Professor Lee said my point and if you look at what the FED policy is is the Fed policy is a risk

management approach so they do do a base scenario and then they do the balance of risk in order to maintain in that

scenario my point is that inflation is not longer a risk but a Slowdown is a risk and that you cannot maintain such

high interest rates when inflation is going down to personal consumption expenditure to

2.6% you cannot have a uh real interest rate of 2.5% 5.5% over so my point is that now the

risk the balance of risk is more on a Slowdown you don't only see it in the labor market but also in the earnings of

companies but coming down to trade blocks is a new globalization what we are facing thank you Martin Dr Cal how

do how do you see from China because there's an argument that says China you know the America the Americans see China

as a threat Chinese say we're just trying to do our own business you know how how do you see China and and are we

at the end of globalization okay uh I fully agree uh what Martin just point out

uh to the shift of uh foreign trade from China uh I guess in near future the whatever who take a White House the

American policy to China wasn't big changing that mean they still will they call small yard High Hand high fence uh

by uh High tariff section or or export control whatever but at the same time yes I want to point this uh strategy in

some way uh uh play out uh you look at at the figure at the US export among the total us export the sh from China have

already come down a little bit or a lot come down yeah that's maybe reduce probably

5% or something like that but at the same time the amount of export from China to us still continue to

grow that that that's something happened at the same time yeah yeah U also as a marting point so in order in order to

avoid the section or high tariff from us uh some uh uh export to other country like Mexico Vietnam or other country

then re export to China also now many chines company to go oversea to make investment there that that's something

uh just happening uh in China um so what I try to say is I looked at the data actually yesterday Chinese governments

issued the the the trade date August it's very interesting the export from China grows

8.7% so that's the Bri point for Chinese economy as the uh William Le Point out now in China do domestic demand very

efficient but at the same time unexpected you know then most people actually export from China very

strong that support China continue growth uh maybe in this year as I say probably can reach 5% or maybe a little

bit low than 5% that's the basic Bill Bill on this issue of globalization so so you know are we

seeing the end of globalization is it a new globalization as Frederick says or is it just a rearranging of

globalization it's a recognition that globalization as it was taking place after China joined WTO in in early 2000

it was a huge distortion on the world economy because of China's success China was so successful in producing stuff

Goods uh manufacturing Goods uh and and and and and and Light industrial stuff so successful it was so cheap everybody

wanted to buy from China so so China's success caused a huge Distortion and now the world says you know besides

efficiency and and cheap stuff I want safety in my Supply chains I want soundness and stability in my supp and

resilience and resilience so that I can depend on it and National Security so these are elements that now have come in

to reshape global trade and and the French sharing that that Martin talked about he's absolutely right by the way

you get you hear a consensus that's very unusual here right we all agree globalization is changing and needs to

be ended and I'm telling you why because of the additional things that have to be put in place safety soundness security

stability and and for Korea I think the most important thing is is is really hinted up by what Martin said going into

the new trade agreements should be much more Regional your main trading partners and bilateral trade deals because

they're easier to Target Korea knows what it wants to do with its own industry you want to help certain

industries you want to push resources into certain industries to because it gives you a better economy stronger

economy you do that with trade deals bilateral trade deals by putting those terms with your main trading partners if

you try to get five or 10 countries together to agree on those same terms that's almost impossible to get that

agreement somebody's going to hold out and it'll take forever to do that kind of stuff so so I think for Korea going

forward especially because Korea trades with both China and the US those are those are number one and I think for

exactly those are the main trading partners so so it's with the really really smart it's something I said last

year when I was at this forum to have these bilateral Arrangements negotiated fairly quickly and can be changed fairly

quickly depending upon how your economy changes and what's smart about the the arrangements for Korea is that your your

semiconductor agreements with the US is to supply the US with inputs for the the high-end semiconductors but also with

China you managed to negotiate with the US ways of getting around the sanctions so so I think that the for Korea this

new regionalization this new FR Shoring fren Shoring is Korea Shoring as far as us is concerned and I think that's

something that that is going to be very helpful for Korea going forward um before we uh just a real quick question

about Africa now when I when we talked about this none of you said let me talk about Africa but if if I don't think we

do a good job talking about the world if we don't mention where does Africa fit into this new globalization Frederick do

you want to try that one I got Martin on the other side if you don't that's okay Martin you want to go ahead and

then go to Bill sure what we've seen so far is Africa being a key supplier of uh Commodities in particular to to China

and in return getting a lot of infrastructure uh that is quite needed for the development and the logistics

for for Africa now the key challenge that Africa has is that so far the Chinese policy towards this continent

has been tried to get uh tried to feed the industries that uh they needed to be fed in uh in China but more an

extractive policy in terms of extracting minerals extracting Commodities and not leaving value added inside of Africa so

what we've seen is a pretty stable growth in Africa of around 5% but very strong inequality and uh in terms of the

standards of living so clearly the the policy that China has had which has been uh uh clearly creating warnings in Latin

America is it going to have an extractive policy in terms of our Commodities what is China going to live

in our countries in terms of value added in terms of creating employment so far its influence in Africa has been

basically to extract uh the uh the the the minerals or what it needs to feed its industry but yet has not left better

standards of livings and that's clearly one of the challenges for one of the key regions in the world in terms of

producing Commodities Visa the future bu you want I mean because because I understand that the Chinese companies

are also building Railways and power Dam yeah I I I think for Africa one of the things that it's challenged by is it's

got to build infrastructure because as bad as much as I say you know China is subject to dismal demographics because

of Aging population and and Korea is as well Africa is the other end of it the youngest population in the world is

located in North Africa and they need jobs and in order to get jobs they need infrastructure investment the the lesson

there is beware of people coming with gifts right the belt and Road strategy was say oh China says I am here to help

you build your infrastructure but in doing so I'll help you finance it now China is the biggest creditor for

emerging market economies way over the IMF way over the world Bank way over anybody else China is the largest

creditor to Emerging Markets and so China really has a very important role in restructuring this huge amount of

debt because it's very hard for these emerging market economies to pay them off and and so far the the restructuring

that China has done has really not helped relieve the burden on these countries in fact in some cases like in

Djibouti and in other places they've taken Equity as payment all right you can't pay for the Port Port is mine

right can't pay for the dam in in Peru the dam is mine so so so that is in some ways my criticism of how China as the

main creditor of the world has not really proceeded responsibly in restructuring

debt do you want to add to to Africa or you I'm ready for my last question absolutely I mean I I mean I think I

think sort of if we take that demographic Viewpoint I think there are huge opportunities that exist um

especially in Western Africa and looking at sort of Nigeria Ghana uh that link could be sort of pretty amazing but they

need to step out of the commodity cycle they need to be have an economy Which is less responsive to how that cycle moves

and of course which has always been or not always but for a long time being the main problem which is that they need to

have institutional stability uh and if they don't have institutional stability with the economy and with the political

system it's going to be extraordinary difficult to attract foreign investments and get that more investment driven boom

that they I think the only point I'd add to that is there are 55 different countries in Africa some have amazing

institutions others have have weak institutions and and we really have to look at at at place by place um I have

one last question then maybe we have time for for a question or two from the audience you know we talk in this in

this forum we've been talking about Innovation we've been talking about about you know Ai and and chips and

later today they're going to talk about neurological Innovation um Bill you mentioned demographic crisis you know is

is is technology or is digital technology the solution to increase productivity so that even if we have a

lower population we'll still have uh Prosperity or or is there something else going on uh and how do how do you all of

you see this and I guess you want to start Bill and then maybe Fredick you a book on it we'll get everybody's opinion

let me just frame the difficulties here the the fertility right here in Korea as you all know is 72% right there's 72

births for every couple out there in China as bad as it is it's 1.0 in in in in Europe it's 1 and a half and in the

US it's close to 1 and 3/4 but you need 2.2 to keep your population right they're all declining and so it you know

but it's declining the worst in Korea um and and I think what one thing Korea has going forward is the high-tech AI kind

of of of technology that you have that is the biggest hope for increasing productivity and real wages and

continuing to have growth the trouble is um how you execute it because one thing that happened about globalization and

and new technology in the US so many people lost their jobs because the technology the way it was implemented

was the substitute for people um I I gave a talk in Silicon Valley and I said the challenge that every software

developer out there is to develop an interface for the software and and for the AI and for the technology that's

being put in place so that you make a high school graduate as productive as a PhD right you maybe that's not so

productive at least as productive as an MBA and and and and so the software inter too bad for our MBA students

because they make they want to make more money than high school graduates well but high school graduates can be

productive depending on how the software interface is put in place and and so if you use the people wisely right the

people that you have they can have very high incomes very good jobs but again it or they could lose their jobs depending

on how that technology is implemented and that's really the key yeah um Martin you want to go ahead and I'll let you

close this one Frederick go ahead Mar yeah the two contributions that Latin America could do to uh in terms of

increase of productivity in the use of artificial intelligence are in act Tech in agricultural technology for example

in terms of uh capturing what are the trends the weather trends the droughts you know the the the catastrophes that

happened around the world in terms of droughts or uh in terms of uh floodings well ai's capability is able to predict

uh what kind of Outlook you will have and clearly that will increase Agricultural and and food security going

forward and in terms of minerals as I said in terms of critical minerals also using AIS in terms AI in terms of

detection exploration can advance much more the productivity that you have in these two

areas Dr Cal productivity technology yeah I my point is yes technology very important to improve productivity but at

the same time I still want to point out uh other aspect particularly structural reform uh in most countries still very

important in case of china uh yes uh uh we produce lots of commodity but people still um we still don't fully uh finish

urbanization still less um 50% uh people living in the in the city that's something uh will become the driving

force to push China continue growth Prosperity prosperity for everyone yeah also other you know structural reform

still needed in in case of china I guess maybe in other country a different way for us how to uh to solve some uh uh

extreme in income inequality that's something very important for China for for us stabilize or po economy that's

also uh same important from as technology Advan Frederick on this issue of technology I mean you're you're

writing a new book about it you've got the technological illusion is this stuff illusionary is this stuff going to make

us better off is it going to make us slaves to robots I don't know no I think fortunately I don't

think they're going to make us slaves to robots robots um uh no I I I mean what I would what I would say is basically that

I don't think there is any question that new technology is going to have a positive contribution to underlying

dynamics of eon the economy uh it's going to contribute to prod productivity growth for sure the question is what are

the scales that we're talking about here are we talking about the type of gradual incremental structural shifts in

technology composition in economy that we've had for the past 40 50 years uh with the sort of first arrival of more

data and computer generated type of change in technology uh if that's the case well then we're not talking about a

huge lift coming to the economy from AI or from Quantum or from other emerging Technologies so I think the the promise

which is out there right now of course is that the KnockOn effect from AI Quantum what we're going to see in biom

medicine Neuroscience Etc is going to sort of change the path of productivity growth radically and we not seeing that

yet that's not what we what's coming out from the data and I I it's partly an issue about the technology and

technological development that it takes time in order to see how these things are going to merge but the other point

is that well technology is not sort of something which automatically is going to fuel up an economy just by adding

more technology to an economy it also depends on the Dynamics of the economy and the extent to which that we can have

entrepreneurs and companies that can start contest Market with new technologies and what we've seen for 40

50 years of course is a gradual slowdown in markets uh for having that type of contestability for making it easier to

to contest markets we have examples of course over the past 15 years with um say the arrival of the iPhone or uh Mark

Zuckerburg and Facebook and sort of the social media change which has been on extraordinarily importance in terms of

changing some smaller markets like um advertisement or media uh but when we look at the big part of the economy we

haven't really seen that yet it's much more of incremental gradual change it's positive we need to um see much more of

it coming but so far this is not sort of the Big Bang um that many have been expecting gentlemen I think we got the

time right we do have about 7 minutes 10 minutes that's about three two three minutes each kind of where where do you

see everything where do you see the global economy in 2025 how do you see the these things coming together I don't

know maybe again we can start with you Martin and then work our way down the line how how do you see the world and

and by the way Martin I'm curious what do you think about mle that's a that's a long answer but

I'll try to keep it short H the m is the president of Argentina very radical uh economic uh policy I'm not sure if he's

going to implement it or not well let's start with the world economy uh clearly the the base scenario in terms of a risk

management approach where is the B scenario is we are going into a a Slowdown of the economy a lower interest

rate environment the key question is where is the new neutral interest rate that is to say where is the the interest

rate that is neutral Visa inflation is it 3% is it 2.75% well that is the key question that

will determine in my view uh how uh if we have a Slowdown and how that develops around the world two critical elements

obviously is Visa the election in the US is how the Russia Ukraine war will end it is clearly that with a trump

Administration there will be a a sort of uh a a movement towards uh stopping the uh the aid to Ukraine and probably

forcing a peace agreement which will be unfavorable to Ukraine and what that does me that means in terms of

geopolitical Trends obviously uh what will happen in the Middle East not particular not only with you know the

social consequence of that but in the price of oil you know that's another critical element that we need to see uh

in the next year longer term and then I have a word about melee uh the key factor is how is this geopolitical

tension between China and the US going to develop uh how far is it going to go what are the areas of uh competition

that it will have it will be in technology in trade uh it will be in the military side from my point of expertise

which is monetary economics what I see is that there will not be a replacement of the Yan for the US dollar as a

reserve currency what I see is that in talking to in my experience and in dealing with Chinese officials is that

China doesn't want to open its capital account so that foreigners can come in and out with speculative speculative

capital and manage their exchange rate as we've seen it so so far uh last question about mle mle is a new

president in Argentina he has been basically the result of the failure of the political class of the traditional

establishment political class in not delivering uh a better standards of living for

argentinians that in my view uh Mike is not a phenomenon just of Argentina we've seen seen the failure of traditional

politicians around the world uh many cases in Latin America we see it also in Chile we have seen in Colombia we have

seen it before in Brazil with bolsonaro uh we have seen it with Trump in the United States we have seen it in Italy

with Georgia Mone so there is a failure of traditional two-party system to provide uh the uh uh the the increase in

the standards of livings that people want at this point so mle is the emergence of that it's an outsider you

know he was a commentator in uh TV shows two years ago he didn't have any political structure and it was basically

uh argentinians being fed up with the failure of the past trying to elect a person that has been quite radical I

will say one key asset and with this I finish is that he has managed in a country that has overspent and over in

debt has managed to balance the budget in six months his main asset has been to bring fiscal discipline to Argentina now

clearly the question is will that be sustainable will that be only reliable on one person or that could be

widespread to the rest of the country thanks so much Martin Dr Cal how do you see everything okay uh following what

Martin say I guess there are three accidental event uh which have a great impact on the economy of global economy

of next year is election of us war in Gaza and Russia invasion of Ukraine in addition of that also there's another uh

factor which is the tension between us and China uh as I say uh previously uh the tension wouldn't be go away maybe in

one or two decades but at the same time also I want to point out very important fact uh uh last year there's a summit

between the leader of us China in San Francisco so after that you can see the interaction between us and China uh both

side or of the leader of both side don't want military conflict that's something I think is good so I guess next year the

whatever who take a White House the the relation between us and the China can be manageable still I think under uh under

control assuming that so I guess the general um situation of world economy according the forecast of some

International uh economic organization uh IMF World Bank recently they little bit raised the forecast of GDP next year

so the term I want to use to describe what happening next see is the mediocre is not very high not very low okay

mediocre Bill what what how do you see how do you see are you Optimist pessimist my my answer to your question

Mike is who cares about everything focus on what's important focus on what you can do something about and what will

affect your life and right now of all the topics we discussed here the regionalization of the global economy is

the one thing that's going to work in Korea's favor because you can slip and slide across all all these regions

everyone considers Korea a vital trading partner how do you preserve that position that's the challenge for Korea

going forward right War yes that's good that's always on the horizon especially if you look North right but the trouble

with here is that you could really spoil things by joining sides one way or the other or by joining these large

multilateral agreements or trying to get these deals put in place that take forever so for me again my answer to you

is focus on what's important to Korea and make sure sure you make it happen and stay friends with both the US and

China is that the basic idea Frederick how do you see the world are you an optimist or a pessimist cautious

optimism yes I think cautious optimism is a good way to describe where I stand on many of these issues I I mean there

are lots of things to be pessimistic about and lots lot of uncertainties when it comes to um situation Russia Ukraine

looking at the broader development in in the Middle East uh with the potential of having sort of a much larger Arab

conflict um um we have other so we talked about Africa previously we have the sahal and difficulties there so we

can we can spend a lot of things focusing a lot of things that are going to make us more pessimistic but the I

mean the the upsides I think are that um more economies are beginning to figure out how they going to manage the type of

structural shift that are happening in the economy and these structural shifts are about moving from uh an old type of

globalization which was multilateral or Regional or it was organized on the principle that we're going to trade in

predominantly Goods we have now Technologies we have now much greater uh ability to change services sectors and

to get Services sectors to become much more trade incentives intensive than they were in the past uh we have Global

flows of knowledge ideas technology patents that are are rising extraordinarily fast and help to reshape

how firms work and how they integrate even at the workplace uh ac across borders but how do we sort of configure

that with the other Trend which is what we've been talking about on economic security and and changes that are

prompted by different risks uh connected to geopolitics and the risks of War um I think even if even if it War may not be

uh the consequence or more Wars are going to be the consequence of of the Dynamics that we see it play I think

there are uh problems for China for America and for Europe and for many others in this configuration which is

that they are resorting back to a very sort of State cented idea for the management of the economy uh we see

industrial policies becoming stronger we see in the Chinese economy that the state is obviously on the advance and

and having much more sort of stronger impulses in the direction of the Chinese economy but that's also the development

we're seeing in America and Europe as well and it is going to be unhelpful uh it's going to make it hard to make this

configuration to work and figure out sort of beyond the old Breton wood structure of of global economic

management what we can do but hopefully 2025 is going to be a year when we can sort of take a few more steps towards

that configuration and figure out how we going to get this to work how to get this to work and and live in coexistence

which is the theme of the panel so so the theme of the conference thank you gentlemen thank you very much for your

attention and thank you for your questions [Applause]