The Emirates Policy Center (EPC) has organized yesterday (Monday, 11 May 2020) a webinar on “Potential Post-Coronavirus Geo-economic Shifts”. At the opening of the webinar, which was broadcast live via the Center’s accounts in different social media platforms, Dr. Ebtesam al-Ketbi, EPC President, said that the implications of the COVID-19 pandemic were not confined to the public health systems of countries of the world or to human losses; they have also extended to the world’s economies. Different countries are experiencing losses in Gross Domestic Product (GDP), a slowdown in economic growth, damage to the different sectors, the bankruptcy of thousands of companies and enterprises, layoffs of millions of staff and workers, and an expansion of poverty. She added that while there are varying projections with regard to global economy as a result of the coronavirus crisis, ranging from the Great Recession scenario to the strong launch scenario, the crisis will doubtlessly have deep impacts on the geo-economic situation at the global and regional levels alike. It may even give birth to a different global economic order that would be different from the one prevailing for decades.
Dr. Giacomo Luciani, Adjunct Professor at the Graduate Institute of International and Development Studies in Geneva and a renowned expert in Middle East economies and global energy, indicated that the economic consequences of the coronavirus crisis will persist in the long run even if the world economy tends to recover after the discovery of a vaccine or an effective treatment for coronavirus. For instance, the energy sector, which has experienced a substantial decline in demand, will not return rapidly to its previous demand levels. It will also experience a decline in investments which would affect it in the long run.
Dr. Ibrahim Saif, the CEO of the Jordan Strategy Forum, said that the global economy is likely to proceed towards an L-type scenario, which means that the economic recession will last for a long time. However, he explained that while many sectors, particularly energy, transport, retail, tourism, hospitality and even the financial sector, have been affected by the crisis, other sectors, particularly health and technology, have benefited from it. He added that the crisis will provide opportunities in that it will create changes in the behaviours of individuals and the practices of countries. For instance, while people used to favour traditional education, the crisis has revealed the huge potential of remote learning and remote treatment. Good applications of these were seen in the UAE during the crisis.
Dr. Hani Findakly, Vice Chairman of the Clinton Group Inc. in New York and an international expert in investments and development, underlined that there is no winning country in this crisis. Even China has experienced an economic contraction of nearly 6 percent in the fourth quarter of this year, which is unprecedented over a 40-year period. He added that a hundred countries in the world have submitted applications to the International Monetary Fund (IMF) to obtain financial support to counter the consequences of the coronavirus crisis.
With regard to future responses by countries to the crisis, all three speakers underlined that globalization will be subject to adjustment. As a response, most countries of the world, including major countries, will tend to return to local industrialization, adjusting supply chains and enhancing investments in the food and health security. However, they indicated that those trends will take time, while underlining that isolation and inward orientation are not an option for any country. The crisis has proved that countries cannot counter global crises individually. Rather, they need regional cooperation at least.
With regard to the possible future escalation of the conflict between the US and China, Dr. Findakly suggested that such a conflict will have negative effects on both countries. It will also undermine global trade whose levels will be slowing down anyway as a result of consumption decline due to coronavirus. On the other hand, he thinks that the Chinese “Belt and Road” initiative will be affected by the coronavirus crisis as a result of decline in global Chinese exports. The crisis may even drive China to focus on neighbouring countries whose economies are strongly linked to the Chinese economy so that it would strive to achieve a speedy recovery of those economies.
With regard to the impact of the coronavirus on economies in the Middle East and their geo-economic situation, Dr. Luciani indicated that the crisis has led to a substantial decline in the prices of oil and gas, the two resources relied upon by the economies of many countries in the region. Considering that energy prices will not return to their previous levels in the near future, those economies will remain under pressure in the form of decline in GDP and budget deficits. The international expert in Middle East economies said that the crisis will reveal new economic dynamics, such as the implementation of reforms in the economic system and re-structuring some of its sectors, such as the re-structuring of the labour market and enhancing economic diversification policies.
Lastly, he underlined that all countries of the region are called upon to benefit from the coronavirus crisis by performing two important tasks: making peace and cooperation to solve conflicts in the region, and investing in local resources.
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