The world economy is at a crossroads with many countries adopting protectionism while looking to deepen globalization, Singapore’s deputy prime minister, Heng Swee Keat, said on Thursday at the World Economic Forum’s India Economic Summit in New Delhi.
Heng highlighted three global trends and challenges—the retreat from globalization in some parts of the world, rapid technological change, and growing inequality.
“There are major changes in the global economy. In some parts of the world, there is a great desire to retreat from globalization and, in some parts, there is a great desire to integrate our economy better to have better specialization and division of labour, and how, through that, we can raise productive efficiency of the resources we have. That is one aspect," Heng said.
There is also growing inequality, both in terms of wealth and income, both within and across countries, Heng said. “We are seeing growing inequality in terms of wealth and income, both within countries and across countries. We are seeing a lot of concerns about the impact of economic growth on sustainable development, on the environment," he said.
Heng warned of greater economic uncertainty because of the ongoing US-China trade war. The conflict will significantly disrupt the global supply chain if it continues, he said. “There is trade friction. There is no sign of it abating. This is a very important time for us to come together and look at what is it we can do together, given this broader global context of South-East Asia and rest of the Asia, and all those like-minded countries around the world can come together, and support global integration, the multilateral trading system and for us to tackle many global challenges around the world," he said.
“All of us are suffering economic damage. It’s quite unprecedented," Heng said. Technological changes are also growing at a very rapid pace and this is going to have a significant impact on almost every sector in the economy and the importance of innovation will be crucial, he said.
The world is in the middle of a technology-led transformation, said Sequoia Capital India managing director Shailendra Singh. The compound effect of smartphones, now in the hands of half a billion Indians, rapid digital payment systems, such as the Unified Payment Interface, and India’s tax reforms, including the implementation of the goods and services tax, have driven rapid changes in the economy, he said.
“The next decade will be the golden decade for technology and entrepreneurship in this region," Singh said. In such a rapidly transforming world, leaders and skilled workforces will be key to economic dynamism, he said.