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New World Economy

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A keynote speech delivered at #SeamlessVIRTUAL conference (Saudi Arabia 2020) on 7th July 2020

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New World Economy

  1. 1. The New Economy Saudi Arabia 2020 | 6 -9 July 2020 Live Online Event
  2. 2. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  3. 3. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  4. 4. Covid-19 outbreak exposed unprecedented socio- economic threats and the long-term impact still remains indeterminate.
  5. 5. The global economy is literally in 'free fall' amid COVID-19 pandemic.
  6. 6. Covid-19 coined as the 'Great Lockdown' crisis – seems to be the greatest global economic crisis in a century.
  7. 7. Current crisis is likely to be push the world to a 'new normal', a new shape and order.
  8. 8. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  9. 9. Lockdown and social distances policies are likely to create significant socio-economic effects.
  10. 10. Covid-19 pushed half the world’s workforce on the edge where hundreds of millions of people worldwide have lost their jobs.
  11. 11. The impact of the pandemic is felt across all industries due to supply chain disruptions and reduction in demand… leading to historic climbing of unemployment rates.
  12. 12. COVID-19 is likely to push 71-100 million people into extreme poverty (World Bank )
  13. 13. A historic wave of bankruptcies are projected over the next 18 months, with enormous pile of accumulating corporate debt.
  14. 14. could be set back by $82 trillion in damages due coronavirus pandemic over the next five years. The global economy
  15. 15. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  16. 16. Economic recovery scenarios are dependent on successful control of the virus spread and the actions taken by governments.
  17. 17. The dilemma of public health and economy?
  18. 18. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making Trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  19. 19. Advanced and emerging economies adopted Keynesian economic approach with historic rescue packages.
  20. 20. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making Trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  21. 21. Covid-19 Oil prices Cold wars Global debt Covid-19 Oil prices Cold wars Global debt
  22. 22. Global economy outlook highly remains uncertain, keeping policymakers and businesses on the edge.
  23. 23. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making Trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  24. 24. 1. Growing role of the State Governments will be under tremendous pressure to play a more active role in their economies; to promote economic stability and growth. This would require radical reformation and restructuring of government systems in order to revitalize their economies.
  25. 25. 2. Rise of Digital Economy The digital economy will act as the vehicle through which national and global markets and economies will operate and produce the added value. 4th industrial revolution technologies, such as artificial intelligence, machine learning, robotics, and big data, will redefine and restructure the economic and social structures. Governments would need to be at the forefront of the change, and proactively set the pace of transformation through alignment of national goals and development initiatives.
  26. 26. 3. Policies will focus on Employment issues Government policies will pay more attention to reduce unemployment rates besides the focus on economic growth, and help increase aggregate demand. Enterprises on the other hand, will race to ensure optimal use of available resources as jobs gets changed by automation and higher emphasis is placed on skills.
  27. 27. 4. Re-conceptualization of Economic Value The concept of “value” will emerge as a primary measure for exchanges and in stimulating economic growth. As value will be associated with intellectual property, this will raise political and economical tensions between countries.
  28. 28. 5. Reduced Interest Rates Interest rates will drop to near zero to help spur spending on business capital, investments and household expenditures. This is likely to lead to increase in inflation, the impact of which may take the global economy into the unknown.
  29. 29. 6. Disconnecting Financial Exchanges from the Economy The new global economy is likely to trend towards a declining interdependence on financial exchanges, and will likely have modern alternatives for mobilization of savings, and the creation of liquidity for investments. It is unreasonable to rely on an economic pillar that gets affected by rumors and causes stagnation and losses in trillions.
  30. 30. 7. Continuing Globalization Despite calls for introverted economic models along with justifications of dangers associated with dependence on the outside, the world is likely to see a new form of globalization. This would entail new geopolitical maps in which countries will make ties with each other based on their national and security needs and as a counterweight to sudden changes and crises that may arise as a result of conflicts, epidemics, etc.
  31. 31. 8. Individual ownership The new economy will prompt new models of ownership, that will reshape how the economy works and for whom. Ownership of capital will become ever- more pivotal.
  32. 32. 9. Reduced Space for Individual Freedom The Corona crisis has produced a fundamental change in relation to individual freedom rights; something that constitutions have consistently emphasized over history. The future will reduce these rights and are likely to be replaced by many crippling societal restrictions.
  33. 33. 10. Immunity of Societies This is an axis that would change economic practices. People's health, levels of immunity, and capabilities of health systems will be one of the most important economic resources and enablers, where governments will attempt to allocate higher budgets and commensurate with their goals.
  34. 34. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making Trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  35. 35. Digital transformation is the only means to bridge the gap brought by the pandemic crisis
  36. 36. Digital operation has become a necessity in light of current need to remain physically distant.
  37. 37. Dimensions of Arab Digital Transformation Framework Proposed Framework of the Arab Digital Economy Strategy Arab Vision for Digital Economy serves as a distinctive blueprint for regional transformation and competitiveness.
  38. 38. Traditional economy methods won’t survive the storm brought by the 4th industrial revolution age.
  39. 39. 1870: GDP $1.94T 1870 1993 2019 World's Economic GDP Timeline
  40. 40. 1870: GDP $1.94T 1870 1993: GDP $40T 1993 120 years 2019 $38T World's Economic GDP Timeline
  41. 41. 1870: GDP $1.94T 1870 1993: GDP $40T 1993 120 years 2019 2019: GDP $142T $38T 27 years $102T World's Economic GDP Timeline
  42. 42. Agenda• Introduction • Post-Covid-19 World • Recovery Scenarios • Policies and Decision Making Trends • New World Order • Key Traits of New Global Economy • Digital Transformation • Concluding Remarks
  43. 43. Covid-19 epidemic is likely to speedup the acceleration of digital transformation needed to achieve socio-economic and competitiveness goals.
  44. 44. Governments need to address unemployment and economic growth with more innovative mindset in order to transform vital sectors like health, education, work, retail, …
  45. 45. Economy diversification Uplifting Productivity Production Capabilities Competitiveness Unemployment Healthcare Work and Labour Market Retail and Commerce Entertainment/Tourism Education Re-defined Government that is run by innovation and result orientation
  46. 46. Email: alkhouriali@gmail.com Slide Share: www.slideshare.net/alkhouri Academia: http://independent.academia.edu/DrAliAlKhouri @DrAliAlKhouri Professor Dr. Ali M. Al-Khouri Advisor, Arab Economic Unity Council Chairman – Arab Federation for Digital Economy League of Arab States www.arab-digital-economy.org

A keynote speech delivered at #SeamlessVIRTUAL conference (Saudi Arabia 2020) on 7th July 2020

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