The G20, the IMF and the Doha Round

The G20 meeting last week is being hailed as a success and in many respects I think it was, I hope it will be a helpful step on the road to recovery. The meeting represents the start of a new global process as both the developed and emerging economies come together to form a new Global Forum.

For the developing countries, one of the best outcomes was the larger commitments made to the IMF. According to the Closing statement the Organisations resources have been trebled to $750 Billion, consequently the IMF is going to become a much more important actor on the world stage. The next thing on its agenda must be reform and reorganisation to ensure it can match its new responsibilities in restoring the flows of trade and finance to the developing world.

I was, however, disappointed by how little progress was made on international trade. The requisite statements were made regarding resisting protectionism, but a stronger commitment to the Doha round would have been encouraging in this time of decreasing global growth.

Africa to buck recessionary trend

While visiting East Africa last week I had the opportunity to meet with both President Museveni of Uganda and President Kagame of Rwanda to discuss the global financial crisis. It is apparent that there is a lot of innovative thinking going on in Africa right now, around how to resist the severe impact of the Global crisis and maintain the flow of FDI.

A Recent article in Time Magazine ‘Africa a Business Destination’ demonstrated this, reporting that while ‘Africa, usually the poorest performing region in the world economy, is now likely to be among the best-performing’. A consequence of not venturing into the derivatives markets or subprime lending as the west did has left the continent relatively immune to the Global Crisis. While recent the latest estimates for global growth this year look bleak, the same article reports that Africa will ‘buck the recessionary trend’ and grow over 3% this year.

New ideas are emerging regarding investment in Africa in sectors such as Agriculture, Infrastructure and ICT. It is a new reliance on business as cash rich countries such as China and the Middle East look for new markets in which to invest, that will fuel this growth. Even the Investment funds in the UK, Europe and the US are beginning to take serious notice of Africa as an investment destination, practically the agriculture sector.

The Caribbean and the Financial Crisis

I was in the Caribbean last week preparing for our Business Forum to be held in Trinidad alongside CHOGM later this year, so was meeting with government and business leaders, 2 main concerns seem to be affecting the islands’ leadership.

Firstly that the financial crisis is having a direct impact on the islands economy as the level of tourism drops off as potential visitors in the US and UK chose not to travel or to stay closer to home for their holidays. I hope that the various stimulus packages proposed around the world shorten the duration of the Recession and allow growth and prosperity to resume as soon as possible as a drop in the level of tourism is a serious threat to smaller states.

Secondly, there is an indirect consequence that may potential have a bigger impact on some of the island states. The current trend of viewing tax heavens as separate from the rest of the globalised economy and as singularly bad, the focus should be inclusive and on the greater involvement of small states as part of global competition and as useful elements of the global economy.

The threat to the Burgeoning Bourgeoisie

In the last edition of the economist there was an article, the ‘burgeoning bourgeoisie’ that said ‘for the first time in history more than half the world is middle class’. It also highlighted that while the increase India and China has been, as expected; massive the middle class has increased dramatically across all emerging markets. There are for example 80 million more middle class Sub Saharan Africans today than in 1990.

This growth in prosperity is something I have been working for throughout my career, but it is fragile and millions of lives now rest on the decisions that will be taken in the developed world over the coming months. The banking crisis has left millions of the world’s population in real peril and the longer the crisis continues the more of this new middle class will slip back into poverty.

From G7 to G20 - The Financial Crisis

The G7 finance ministers meeting on the 13th passed almost un-noticed there were the requisite statements on coordinating the response to the financial crisis, resisting the pull of protectionism, and the importance of free trade, but no progress on an international trade deal, or a global response to the crisis.

The real priority is to shore up the banking system. Governments should take action together to remove toxic assets from banks’ balance sheets through insurance schemes, and reopen the flow of credit. Im surprised that Governments are mainly taking advice from bankers in this restructuring, when input should come from as wide as possible, including other sectors of the economy.

Attention is now focused on the G20 meeting in London in April, with many hoping that it will become the starting point for recovery, for a new global financial and governance structure.

Trade Talks and the Financial Crisis

The current state of the world economy and the financial crisis makes the successful conclusion of the Doha Round of trade talks all the more unlikely.

The Heads of the G8 Countries are making all the right noises about resisting the draw of protectionism in a retracting market situation and with increasing unemployment at home, but for all this, the result is the same; the Round is not likely to be completed in the present climate and almost certainly not within the year.

While I congratulate Pascal Lamy for his continuous and seemingly untiring efforts to keep moving forward with the Round, I do not believe that either the upcoming G8 or G20 meetings will hasten the conclusion of the Doha talks.

Slumdog Millionaires….

While in Bombay last Month my wife and I along with some colleagues from the UK and Canada, saw Slumdog Millionaire, I thought it was an exceptional film, Danny Boyle should be extremely proud, particularly of the way he captured the image of India. I know the author personally, we met while he worked at the Indian High Commission in the UK, I had the pleasure of reading an early version of the book, it’s a great and inspirational story.

I was however disturbed to read, the allegations lodged against the films makers that the children who starred in the film were paid almost nothing and are still living in the same conditions as when they were discovered by the casting scouts.

I hope these allegations are not true, and that some of the films profits will reach the people who live in the slums, particularly the kids who starred in the film, as Danny Boyle has since said. There is a potential millionaire, born every day in all the Slums of India.