- What would be the most dangerous risk in global economy next year? US interest hike, China hard landing, protectionism, emerging market crisis or something else?
For 70 years, a liberal international order has contributed to gradual economic progress, and also political progress. That order — which departed from the first half of the 20th century by means of an open trading system, successful international organizations and a relative absence of wars — was in large part led by the United States. The most dangerous risk we face in the coming four years is a breakdown of that international order, due primarily to a resurgence of simplistic nationalism in the US as well as in a number of other countries.
- Global trade has been slowing down. What should we make of this?
Yes, after several decades when global trade grew much faster than GDP, that pattern has been halted, ever since 2008. Economists are unsure why. One of the various possible explanations is the absence of successful big new international trade agreements during this period. In that light, the cancellation of US participation in the TPP is especially unfortunate.
[These questions appeared in Chosun Ilbo, in Korean, on January 1, 2017.]
