Publications
Partners
Johannesburg - Globalisation as we know it is changing and is slowly being replaced by a multipolar world, research by Credit Suisse revealed.
In its recent Globalisation report, Credit Suisse Research Institute (CSRI) explained that multipolarity involves the shift of power in terms of trade, GDP, foreign direct investment (FDI), budget size and population. These powers will be less concentrated in a specific region and will be shared across different regions.
READ: Globalisation took hits in 2016, will 2017 lead to more?
Fin24 previously reported that the US election of President Donald Trump as well as the UK voting to leave the European Union (EU) signal that the world is moving away from globalisation. This is raising questions over future trade agreements.
The report highlighted 10 trends that pose a threat to globalisation in 2017. These are:
1. The health of trade
The Trans Pacific Partnership (TPP) between the US, Japan and a group of Aisan countries as well as the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU may not be approved. Trade obstructions across the world are also growing.
2. Debt
Zero and negative interest rates means that more debt can be taken on. However, now that rates appear to be rising, this may put pressure on companies and countries, especially considering debt levels are at record highs since 2007.
3. Immigration
Immigration is a key issue especially in Europe and is one of the contributing factors that led to the UK voting to leave the EU.
4. When will be the next recession?
In Credit Suisse’s view, the next recession may not be “far away” given high debt levels in China and low corporate margins.
5. Military confrontation by accident or design
The South China Sea is frequently mentioned by commentators as a theatre for large power confrontation, stated the report. Other areas may also spark conflict, this includes Japan and Syria, where the conflict is becoming more complex.
6. Stealth attacks or cyber war
Cyber-attacks on companies are becoming more common and they may start having more far-reaching effects.
7. Central banking accidents
A policy move causes a central bank to lose credibility. For example, if a central bank pushes too hard for inflation, it may see the currency exchange increase.
8. People tire of consumerism
The Credit Suisse emerging consumer surveys have highlighted the decline in consumer demands and changing preferences. Difficult labour market conditions in some countries, like South Africa where consumers were less optimistic about their income outlook, and growing wealth inequalities may reduce consumer demand for material acquisitions.
9. Multipolar jurisdictions harden
In order to maintain geopolitical and economic power, more countries may ignore international law. Different regions may start adopting “their own way of doing things” to the detriment of trade and potentially human rights.
10. Climate events
The year 2016 was the hottest year since 1880, the repeat of this may strain farms, food supply chains and could provoke a humanitarian crisis.
