Rising cost of goods and stand-off between global powers put pandemic recovery under threat
Nick Webster | Patrick Ryan
Soaring global inflation and geopolitical turmoil must be tackled to avoid derailing the pandemic recovery, a summit in Dubai has heard.
The rising cost of everyday goods, fluctuating energy prices and tensions between major powers are some of the threats that governments must face together.
On Tuesday, Mohammed Al Gergawi, Minister of Cabinet Affairs, told the World Government Summit at Expo 2020 Dubai that inflation would heap pressure on decision-makers to take action.
In the US the consumer price index rose by 7.5 per cent in January compared with a year earlier, reaching a level not seen since the 1980s.
In the UK, prices rose by 5.4 per cent at the end of last year, while inflation in the 19 Eurozone countries hit 5.1 per cent in January, the highest on record.
“There is a frightening and massive acceleration of inflation in countries of the world, which has quadrupled in the last two years,” said Mr Al Gergawi, who is chairman of the World Government Summit Organisation.
“There are many indicators that show massive changes and it’s become a necessity for governments to deal with them.”
There are demands on governments to get a handle on fast-moving changes in technology and the financial system, he said.
Regulating cryptocurrencies, using blockchain to monitor data and financial information, and harnessing the metaverse are all on the agenda for many governments.
“The speed of change is bigger than what we expected,” he said in an opening session at the summit.
“What happened in the past 10 years exceeded what’s happened in the past 100 years, and events in the past two years have exceed those in the past decade.
“Today, a major part of the developments are by the private sector and governments are trying to respond, sometimes very late.”
Speaking about continuing conflicts, he said “we used to think the world had stabilised” with political and co-operation agreements, but instead “here we are facing more question marks than answers”.
Kristalina Georgieva, managing director of the International Monetary Fund, later said there were many countries where “food is coming scarce and too expensive to buy”.
Ms Georgieva, an economist from Bulgaria, said she lived through hyperinflation in the 1990s after the break up of the Soviet Union and learnt how it sapped productive energy from a nation.
She also spoke of the war in Ukraine and how she feared countries were becoming divided by the conflict.
“I know how devastating a cold war is, how much it reduces the world’s productive potential, and how terrible it is for people living on the other side,” she said.
She called for co-operation to help “prevent another Cold War”.
Roberto Azevedo, who was director general of the World Trade Organisation between 2013 and 2020, dismissed estimates that inflation could ease within 18 months.
“Most people I talk to in different markets see this as a situation lasting a minimum two to three years,” he said.
“I am not convinced this is a situation that can be normalised in a few months.”
Mr Al Gergawi had spoken earlier about how previous government summits hosted in Dubai shed light on future events.
“Summits have focused on opportunities for government. In 2018, we had a talk about pandemics. The World Health Organisation director spoke about how a pandemic can change governments,” he said.
“The current one affected 480 million people and governments lost tens of trillions of dollars. We saw governments that failed and succeeded.
“We also spoke about cryptocurrency and today governments are trying to live with it. Crypto is worth $2 trillion today.”
Before the summit began, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said the UAE was proud to host important conversations about the future.
“Our country will continue to support all forward-looking initiatives that aim to create a brighter future for our planet,” he said.
On Wednesday, Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs, will open day two of the summit with a focus on national economic growth and how that will be driven by different industries working together.
Read moreThe UAE's return to normality after Covid-19
There will be a meeting of minds at the DP World Arena when Sheikha Lubna Khalid Al Qasimi, the UAE’s the first female minister, joins Shamma Al Mazrui, Minister of State for Youth, for a discussion on new opportunities in the government of the UAE.
The summit will conclude with a talk by Antonio Guterres, the UN Secretary General, and an awards ceremony.
Focus will then shift towards Thursday, and the final day of Expo 2020 Dubai.
Updated: March 29, 2022, 4:33 PM