TEHRAN(Bazaar) – Former UK conservative government minister says “we see evidence of a massive cyclical rebound in many western economies so I am not sure the immediate post covid order is the same as the longer term.”
It still seems to me that this is a century for further rise of China and Asia in general, but I think the immediate recovery from here is going to be strongest in western economies,” Lord O'Neill tells the Bazaar in an exclusive interview.
Lord Terence James O'Neill, Baron O'Neill of Gatley is a British economist best known for coining BRICs, the acronym that stands for Brazil, Russia, India, and China—the four rapidly developing countries that have come to symbolise the shift in global economic power away from the developed G7 economies. He is also a former chairman of Goldman Sachs Asset Management and former Conservative government minister. As of January 2014, he is an Honorary Professor of Economics at the University of Manchester. He was appointed Commercial Secretary to the Treasury in the Second Cameron Ministry, a position he held until his resignation on 23 September 2016. He chaired the UK's Independent Review into Antimicrobial Resistance for two years, which completed its work in May 2016. Since 2008, he has written monthly columns for international media organization Project Syndicate. He is the current chairman of the Council of Chatham House, the Royal Institute of International Affairs. He is also member of House of Lords of the United Kingdom since 2015.
Following is the full text of the interview:
Bazaar: You recently stated in an interview with CNBC that as a result of China's economic growth, the global economy will also flourish. In what economic areas will this prosperity be more visible? In other words, in the field of exports and imports, which sectors of the global economy will compensate for the losses faster?
Lord O'Neill: South Korea, the fastest country in the world to produce its trade data, reported on May 1st, that April exports rose by 41pct year on year, the fastest growth rate for 20 years. global trade is recovering remarkably quickly, and this bodes well for many sectors for coming months. how sustainable this is, depends on future policies, in terms of monetary and fiscal policy, as well as how well this pandemic is dealt with.
Bazaar: China seeks to revive the Silk Road under the title “One Road؛ One Belt”. Do you think this project can break the global liberal order?
Lord O'Neill: I think the first few years of OBR have actually not gone the way China wanted it to go, and their initiatives have met resistance from many countries, including those that you wouldn’t typically be thought of as part of the global liberal order. China has to rethink its OBR, and use its financial system better to pursue it, as well as to be more inclusive of hopes and aspirations of other countries.
Bazaar: Some experts talk about the post-corona economic order. Do you believe in this order? If yes, what are the characteristics of this order and what are its main actors?
Lord O'Neill: I am not sure about this. In fact, we see evidence of a massive cyclical rebound in many western economies so I am not sure the immediate post covid order is the same as the longer term. It still seems to me that this is a century for further rise of China and Asia in general, but I think the immediate recovery from here is going to be strongest in western economies. At some point, this might result in fresh bubbles, and Asian economies are definitely structurally better to deal with this, but that is for the future.
Bazaar: Iran and China are considering a 25-year agreement. How much do you think this agreement will reassure China about energy security and protect it from US energy threats?
Lord O'Neill: I am not aware of the details but obviously China seems eager to diversify its energy resources.
Bazaar: When do you think US economic growth will go back to before the coronavirus outbreak, and what parts of the US economy will suffer the most?
Lord O'Neill: I think the US will get back above pre coronavirus levels before the end of 2021, it is showing a vigorous cyclical recovery because of massive monetary and fiscal support. Areas of consumption are benefiting the most, but unless the us retains more of its domestic income for savings, this will not be sustainable over the long term.
Interview by Javad Heiran-Nia
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