SINGAPORE: While trade tensions between the US and China are raising concerns about the implications for the global economy, business professionals around the world are optimistic about global trade, according to a survey published on Monday (Oct 22).
The Bloomberg survey of 2,000 business professionals in 20 markets showed that 74 per cent of them are optimistic that the global system of trade can be restored, though only in the long term. Despite the US-China tensions, 55 per cent said they believe that there will be more global trade in five years' time.
With the rise of new economies, half of global business professionals believe a globalisation model centred on multilateral free trade and open borders can be effective, though they say that the model must be tweaked to allocate the benefits more evenly across wider constituencies.
When asked to predict which countries will be the top three economic powerhouses in 10 years’ time, the majority selected China (86 per cent), followed by the US (70 per cent) and Japan (36 per cent).
“The … survey provides a barometer into public sentiment towards a world economy in transition, a key theme which we will explore at the New Economy Forum in Singapore next month,” said Justin B Smith, CEO of Bloomberg Media Group.
“The survey reveals vast differences in perceptions for the future and highlights the need to bring together global leaders in business and government to find private sector-led solutions to some of the world’s biggest challenges.”
GLOBAL GOVERNANCE NEEDS TO BE ADDRESSED
Global governance was identified as the most critical global challenge requiring action. This sentiment was especially strong among respondents from India, the Philippines, Malaysia and the Middle East, the survey showed.
Yet, despite that expressed lack of confidence in government leadership, three-quarters of respondents across the globe said they believe that world leaders and governments should be the primary force in driving initiatives to overcome global challenges. Only 10 per cent of respondents think that businesses and the private sector should take the lead to address today’s global challenges.
Smith said the private sector has no choice but to tackle the issues arising from the emerging economic order, because governments are failing to act. “We think that private sector businesses must take greater leadership in addressing key global challenges,” he said.
“New economies are playing an expanded role across trade and businesses today, and with a changing new world order, there is an urgent need for real dialogue and action on the long-term implications of this transitional moment.”
DIVERGENCE OF EMERGING AND DEVELOPED MARKET VIEWS
The survey showed there was greater confidence in the trade outlook in developing countries than in the developed world, where protectionist sentiment is rising. More than three in five business professionals from emerging markets say they believe that there will be more global trade in five years’ time.
That view was especially pronounced among respondents from China, Indonesia, the Philippines, Thailand and India. This contrasts with the view of those from developed markets, where just over one-third expect more global trade in five years.
Tom Orlik, Bloomberg's chief economist, said: "One of the striking findings from the survey is the divergence between optimism about the global trade outlook in emerging markets and pessimism in developed economies.
“This suggests that, for emerging markets, the costs of the current slide towards a trade war could be less than expected. If businesses retain that fundamental optimism about the outlook for trade, continued hiring and investment could propel growth forward, even as tariff barriers rise."
Such issues will be in the spotlight at the Bloomberg New Economy Forum, which aims to develop private sector-led solutions to address some of the world’s greatest challenges, including globalisation and trade, technology, finance and capital markets, climate, urbanisation and inclusion.
The inaugural New Economy Forum will be hosted by Michael R Bloomberg in Singapore on Nov 6 to 7.