Crypto News: Economics Daily: Risk and hope

I'm Malcolm Scott, international economics enterprise editor, and today I'm reporting from Singapore on Day One of the sixth annual Bloomberg New Economy Forum — see the full program here. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X (formerly known as Twitter) via @economics. And if you aren't yet signed up to receive this newsletter, you can do so here.

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Even in the best of times, gatherings of political and business leaders and economists tend to spend much of the time discussing risks to the outlook.

So it was no surprise that war, geopolitical tensions, fragmentation and inflation were top of mind for speakers on day one of this year's edition of the Bloomberg New Economy Forum in Singapore.

The world is facing a "moment of danger" with wars in Ukraine and Gaza and "tripwires" that could trigger conflict in Taiwan and the South China Sea, Singapore Foreign Minister Vivian Balakrishnan said.

Khalid Al-Falih, Saudi Arabia's investment minister, left, and Vivian Balakrishnan, Singapore's foreign affairs minister, during the Bloomberg New Economy Forum in Singapore, on Wednesday, Nov. 8, 2023. Photographer: Lionel Ng/Bloomberg

Speaker after speaker went on to detail their worry lists, with inflation looming largest for those in the banking game. But beyond the sprawling risks, there were glimmers of optimism that some of the tensions gripping the globe could in fact soon abate.

Speaking days before President Joe Biden is expected to meet Chinese leader Xi Jinping for talks on the sidelines of the Asia-Pacific Economic Cooperation summit in San Francisco, Chinese Vice President Han Zheng said recent high-level meetings send "positive signals" for the world.

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"Pragmatism is surfacing," Khalid Al-Falih, Saudi Arabia's minister of investment, said of the increasing exchanges between the US and China. Al-Falih, meantime, said talks toward the normalization of ties with Israel remain on the table but have always been "contingent on a pathway to a peaceful resolution of the Palestinian question."

For John Waldron, president and chief operating officer at Goldman Sachs, inflation remains the single biggest risk to the global economic outlook. Lim Chow Kiat, CEO at GIC Pte, sees that as a chance to buy.

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Markets haven't seen the current yield on 10-year Treasury inflation protected securities of around 2.5% for "a long time," Lim said on a panel at the forum. "That's very attractive I would say and that is actually great competition for other asset classes."

No 'Binary Extremes'

Noel Quinn, CEO of HSBC, also noted the global economy's struggle with high inflation and interest rates. That "binding constraint" of economics may cap companies' and governments' ability to disengage.

"I don't buy into the binary extremes of de-globalization, but more of re-globalization," Quinn said. "That change process will take decades and it will be challenging."

But first, there's more immediate challenges confronting the outlook.

"If we get a world that's caught up in a war and distracted in ultimate strategic dead-ends, it's going to be a world which is unstable, hyper-inflationary, disrupted and war will be the defining feature," Singapore's Balakrishnan said. "Now, if we can avoid that, take a deep breath, and somehow get through the next six months to a year, avoiding that disaster, then actually I see glimmers of hope."

The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.

See what else is coming up at the NEF here.

Chinese President Xi Jinping is set to be the guest of honor at a dinner with top US business executives when he visits San Francisco for the Asia-Pacific Economic Cooperation summit next week.
Bank of England Governor Andrew Bailey pushed back against the market bets on interest rates, saying that officials need to carry on fighting inflation for now.
Governor Kazuo Ueda signaled that a prolonged decline in real wages won't necessarily keep the Bank of Japan from shifting toward normalization.
Swedish housing prices fell slightly last month raising doubts over their recent recovery.
Europe's economy is unlikely to crash — even as a more-than yearlong bout of interest-rate increases tames inflation, according to the International Monetary Fund.
Once dissuaded by tariffs starting in the 16th century under Spanish rule, Peru's winemakers are trying to make a comeback on the global stage against more established export rivals Chile and Argentina.

The US government's fiscal path is already worrisome, but things could get worse if Trump administration tax cuts enacted in 2017 aren't allowed to expire in coming years as legislation currently requires.

That's one of the sobering takeaways from a paper by Karen Dynan, a Harvard University economist, published in the Aspen Economic Strategy Group's latest annual policy volume. The projected path of tax revenues would shift down by between $400 billion and $500 billion a year in the late 2020s and early 2030s — about 1.25 percent of projected GDP.

"Many people seem to think that federal taxes have increased significantly over time, but that perception is not borne out by the data," Dynan also wrote. And she noted that the nonpartisan Congressional Budget Office "estimates that the overall federal tax rate paid across most of the income distribution has declined over the past 40 years."