Trade wars will make nations poorer – Indonesian President

Indonesia President, Joko Widodo

President Joko Widodo of Indonesia has told world leaders that unilateral economic policies and trade wars do not increase the world’s wealth, but rather makes nations and people poorer.

He said this on Friday while opening the plenary session at the ongoing International Monetary Fund (IMF) and World Bank Group (WBG) 2018 Annual Meeting in Bali, Indonesia.

Using the popular American television show ‘Game of Thrones’ as to illustrate the happenings in the world, he said that relations among major economies had become a power struggle which was not healthy.

Widodo added that the quest for economic dominance by the big economies would only worsen the world as there would be no winners or losers, rather growth should be inclusive.

“Winter is coming, while countries are busy fighting, a bigger threat is rising and there is no point of winning in a world of devastation.

“We should step up our efforts to ensure that the growth is inclusive and the normalisation of policy settings by major economies is well communicated and implemented in a timely manner with minimal adverse spillovers.”

The president said that while the global economic outlook was showing some positive signs, there were considerable risks to the outlook and it was still unclear whether the positive global growth momentum could be sustained over the longer term.

According to him, climate change is a larger threat that cannot be solved by nations individually.

He advocated for the establishment of a global mechanism to help countries cope with natural disasters.

He also said that no country could be totally safe from the risk of disasters, adding that disasters have caused major human, social, economic and financial impacts in many developed and developing countries of the world.

“If left unchecked, the economic impact of natural disasters could become a serious impediment to our goal to eradicate poverty as people lose their jobs and assets.

“For governments, natural disasters could potentially put pressure on the sustainability of budgets and thus we need to discuss feasible solutions to designing risk financing options, including through the establishment of a funding mechanism for disaster risk and disaster insurance.”

Ms Christine Lagarde, the IMF Managing Director, said that if trade disputes continue among countries it could reduce global Gross Domestic Product (GDP) by one per cent over the next two years.

According to her, there is the need to de-escalate those trade disputes immediately.

Apart from the fiscal and monetary threats to economies, she said that countries faced inequality, technology and sustainability threats.

She, however, urged countries to put in the right policies to effectively address these threats for collective economic growth.

The World Bank President, Mr Jim Yong Kim, said that over the last 25 years, more than one billion people have lifted themselves out of extreme poverty.

He added that the global poverty rate was around 10 per cent, the lowest it had ever been in recorded history.

He, however, said that though this was one of the great achievements recorded, some 736 million people still live in extreme poverty – less than one dollar and 90 cents a day.

“A quarter of the world’s population lives on less than three dollars and20 cents a day – the poverty level in lower-middle-income countries.

“Nearly half of the people on earth live on less than five and a half dollars a day – the poverty level in upper-middle-income countries.

“The pace of poverty reduction is also slowing, which means that we have to accelerate our efforts on the three pillars of our strategy to achieve our goals.”

Kim also said that technology was changing the nature of work, adding that technology and automation were replacing scores of tasks and doing away with some jobs.

He also said that innovation was changing the scope of existing jobs, creating new occupations and launching career fields that did not exist a few years ago.

According to him, if technology is helping raise aspirations and changing the nature of work, the world have to answer the question of what people will do.

“The key is making the right investments in people by ensuring that they accumulate the health, knowledge and skills they need to realise their full potential.”

The 2018 Annual Meetings of the IMF and WBG brings together experts to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development and aid effectiveness.

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