More than seven in 10 (74 per cent) of business professionals are optimistic that the global system of trade can be restored, though only in the long term, according to the findings of Bloomberg’s latest “New Economy” global survey of 2,000 business professionals in 20 markets.
The study released on Monday found that in the midst of ongoing US-China trade tensions, just over half of survey respondents (55 per cent) say they believe that there will be more global trade in five years’ time.
The International Monetary Fund (IMF) recently warned that trade conflicts will cut global growth forecast this year from 3.9 per cent to 3.7 per cent.
In September 2018, Bloomberg conducted a global survey of 2,000 mid- to senior-level business professionals across 20 countries in developed and emerging markets to gauge their views on the opportunities, challenges, concerns and expectations for the future, against the background of the rise in “new economy” nations.
With the rise of new economies, half of global business professionals believe a globalisation model centred on multilateral free trade and open borders could be effective, though they say that the model must be tweaked to allocate the benefits more evenly across wider constituencies.
When asked to predict the top three economic powerhouses a decade from now, the majority selected China (86 per cent), followed by the United States (70 per cent) and Japan (36 per cent).
“The “New Economy” 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 in urgent state
Global governance (26 per cent) was identified as the most critical global challenge requiring action. This sentiment was especially strong among respondents from India (39 per cent), Philippines (35 per cent), Malaysia (31 per cent) and the Middle East (41 per cent).
Yet despite their lack of confidence in government leadership, three-quarters (75 per cent) of respondents across the globe say 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 says 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 market views
Perhaps surprisingly, 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 (63 per cent) business professionals from emerging markets say they believe that there will be more global trade in five years’ time. That view is especially pronounced among respondents from China (66 per cent), Indonesia (74 per cent), Philippines (76 per cent), Thailand (80 per cent) and India (71 per cent). This contrasts with the view of those from developed markets, where just over one-third (36 per cent) 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.”
Respondents in emerging markets are also more confident about the future and more motivated to prepare for it than are those in developed markets. Some 66 per cent of respondents from emerging markets reported that they are learning new technologies compared to 43 per cent in developed markets, and 56 per cent are upskilling and taking additional professional courses compared to 29 per cent in developed markets. They also recognise the need to start new business ventures (35 per cent) and to be more socially conscious about the environment (50 per cent), as compared to respondents from developed countries (10 per cent and 37 per cent, respectively).
Technology in driving seat
While 60 per cent of respondents overall say they are already learning new technologies as they prepare for the future, the rate of technological learning is lower in developed countries (43 per cent), particularly the United States (30 per cent), United Kingdom (33 per cent) and Germany (42 per cent).
Business professionals from emerging markets expressed overt inclination towards artificial intelligence (AI) and believe it presents workers with new job opportunities that will generate a net benefit to economies, especially those from China, India and Vietnam. Only 5 per cent of respondents from emerging markets say they do not plan to do anything to prepare for the future.
Developed markets on the other hand, recorded a higher-than-average (12 per cent) number of respondents who do not plan to do anything to prepare for the future.
The Bloomberg New Economy Forum 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 November 67, 2018 and will convene a first-ever gathering of 400 preeminent leaders to begin seeking private sector-led solutions to challenges created by a world economy in transition.