New Delhi: Despite the raging political battle in the US for the race to the White House, global trade experts and economists believe that Joe Biden as the next US President would be better for the global economy and trade, saying that a Biden administration will be less confrontationist which will be good for global trade.
“I think, first of all, hopefully, there will be a transition. It is somewhat ironic the way things are going on in the United States. But it (the transition) will be eventually,” said Hans Genberg, a professor of economics at Asia School of Business in Kuala Lumpur, Malaysia.
Professor Genberg, who was an assistant director at the independent evaluation office of the International Monetary Fund (IMF) in Washington DC, says Joe Biden as the next US President will have a positive impact on the global economy.
“I think the Biden administration will be less confrontational and I think that will be a positive for international trade,” Professor Genberg told the audience in a programme organised by economic policy think tank EGROW Foundation.
“International trade is an important driver for economic growth in the world,” Professor Genberg explained in a question by ETV Bharat.
The top economist was also optimistic that the Biden administration would try to put through a bigger stimulus measure to revive the economy.
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The US Federal Reserve, that decides the policy interest rates for the world’s largest economy, had unveiled the biggest stimulus measure in the recent history in the early days of the pandemic that is estimated at around $2.7 trillion, nearly 13% of the country’s GDP and bigger than the stimulus of 2008-09.
The highly contagious Sars-CoV-2 virus has killed more than 1.5 million people worldwide, highest in the USA where the death toll is over 2,50,000 people and is expected to cause a loss of over $9 trillion to the world economy as per an initial estimate of the International Monetary Fund.
“I think also, the Biden admin is going to try to put through more stimulus measures in the United States. Stimulus measures in the United States are needed as long as unemployment is exceptionally high,” Professor Genberg said.
Difficult road for Biden
He, however, explains that it may not be easy for the Biden administration to put through these policies if the Senate is still controlled by the Republicans.
“The problem there is that fiscal stimulus measures are going to require the approval of the senate and to the extent, the senate is still controlled by the Republicans then it will be a difficult process to put together these policies and make them effective,” Professor Genberg added while underscoring the challenges before the team Biden.
“But overall, I believe that the stability the Biden administration will bring to international relations will be a positive impact on the global economy,” Professor Genberg told ETV Bharat.
Trump’s style affected trade talks
Other top economists also concede that Biden’s institutional style of functioning and less confrontationist approach would be better for the global trade and economy.
In an earlier interaction with ETV Bharat, NR Bhanumurthy, Vice-Chancellor of Bengaluru based BASE University, had said that the US President Donald Trump was a very tough negotiator and it left a negative impact on the global trade negotiations.
“I don't think that anybody can be much tougher than Mr Trump in terms of trade negotiations, a person who can completely cut the trade. This is the worst trade negotiations one can have,” Professor Bhanumurty had said. “At the end of the trade negotiations, if there is no trade between the two countries, that is worse and this is what happened under Mr Trump.
Virus will remain a drag on economy
In the same programme, Dr Arvind Virmani, who was India’s chief economic advisor in 2007-09 during Prime Minister Manmohan Singh’s tenure, warns that despite the change of guard at the White House, the risk to the global economy from the virus will persist.
“We are subject to reversals due to a second or third wave of the virus,” said Dr Virmani, adding that the fear of infection of the virus is a drag on economic growth.
Dr Virmani said despite the announcement of high success rate of the Covid vaccine by some pharmaceutical giants, the uncertainty over the efficacy of these vaccines remains.
“If they truly have an effective vaccine and if it can be distributed in large numbers that will certainly have a positive effect,” he said in response to the ETV Bharat’s question.
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