Crisis will lead to rebalancing of global economy - YES participants

Global economy will emerge from the current crisis more balanced with regard to the roles of different countries and regions. A discussion on the New World Economic Order after the Crisis took place at the 6th Annual Meeting of Yalta European Strategy (YES) in the White Hall of Livadia Palace, Yalta.

According to Ronnie Chan, Chairman of Hong Kong based Hang Lung Properties Limited, there will be new world economic order – precisely how it was after the Great Depression of 1920-30s of the last century. “The West ruled the economy. Fair enough, but the developing countries suffered great economic hardships. This imbalance must be corrected. Thus, we are talking not only about the economic recovery, but also about wider opportunities for the developing countries.” From this point of view, Ronnie Chan mentioned, the role of the global economic regulation would become more significant. “If we didn’t have the IMF, it should have been invented now”, he underlined, saying that moral domination of the West in the post crisis global economy would be more reasonable and the world would be more balanced.

Vice President for Europe and Central Asia Region of the World Bank Philippe Le Houerou noted that today we can look into the future with optimism. “We have wonderful opportunities”, he said, emphasizing that we must be certain that the world has learned the “right lessons” from this crisis. “Today we have the G-20 functioning, the role and significance of multilateral organizations is rising - just like after the War the number of issues were undertaken by UN and other international institutions. Today, we have to set new dynamics for this process.”

According to Le Houerou, on today’s agenda there is a great number of issues answers to which can be found beyond the borders of one country – from the banking sector reforms to the fight against climate change. “This is not 19th century capitalism now. Today we must govern capitalism globally”, he stated.

Head of IMF Mission to Ukraine Ceila Pazarbasioglu also agreed with the thought about the need for the global economy rebalancing. The key part in this process must be played by the international regulatory institutions. At the same time, she mentioned, “the regulatory structures must not restrict growth and innovations.” According to the Head of IMF Mission, the economic cycles must be balanced so there would be no extremely sharp rise inevitably followed by a sharp decline.

She also pointed out that the post crisis economy would undergo profound structural changes. “Finance sector will operate in a different manner; industrial production will change. Possibly China will start consuming more and the USA might also see changes in consumer behaviour.” Ms. Pazarbasioglu suggested that in the post crisis economy countries with the most flexible labour markets, as well as those with the accurately prioritized industrial and economic sectors, would be the first to recover.