Businesses around the globe face ‘converging crises’ from geopolitics to pandemic, even as some still struggle to emerge from the global financial crisis of 2008, John Denton, Secretary General, International Chamber of Commerce, said. “Partly due to the Russia-Ukraine war, partly due to Covid 19, and in some part because of the financial crisis, the global economy is troubled. Companies are having a hard time trusting the geo-political stability,” John Denton said in an interview to FinancialExpress.com during his recent visit to India.
Watch full interview – John Denton, Secretary General, International Chamber of Commerce:
Global businesses’ struggle to recover from one crisis after another
There are several economies that still haven’t recovered from the financial crisis, especially undeveloped and developing economies. “We have seen a number of middle-income economies that didn’t qualify to acquire loans from international banks, which deepened the pressure that exists to this day,” he said. The biggest victims are those businesses that operate in multiple countries, as they built their supply chains based on comparative economic advantages which are no longer as relevant, he added.
A number of companies “overweight” in terms of risk are withdrawing their supply chains overseas and it is adversely affecting world trade. “I believe economics should be the basis for opening up economies and easing supply chain issues and not security concerns.” Open economies lead to efficient markets and that is the need of the hour, John Denton added.
But, finally here’s some good news for businesses
“Nevertheless, there is a greater sense of optimism now as central banks globally are regulating the rates and getting inflation under control,” he said, adding,” Although we are witnessing widespread mass layoffs, if you’re in business, you know there’s some opportunity there.” According to John Denton, people often misunderstand trade being the reason for lower growth but the main deciding factor is often the rate of technological advancement. “What we need to focus on now is how we can inculcate maximum skill development in nations and create bread-winners who contribute actively to the economy.”
India’s role in successful G-20
The ICC Secretary General pointed out that India played an “extremely constructive” role in creating a successful G20 last year. “We believe India is heavily involved in crucial matters surrounding global economic architecture which is the essence of G20.” He further noted that a rising issue is the North-South divide and that PM Narendra Modi recognises India’s strengths when he focuses on South-South leadership. Bringing the global south into the G20, Denton noted, and taking the lead as India often does in innovation, will take the “G20 from being good to better.”