“As the great Kazakh poet, Abay, once said, ‘While walking slowly, stride confidently,” the IMF’s Managing Director, Christine Lagarde, stated on Thursday May 16th at the opening of the 2019 Astana Economic Forum, and set the tone for her keynote speech.
In front of a full hall at the EXPO Congress Center in the city of Nur-Sultan, Largarde pointed out that while 75% of the global economy experienced growth in 2018, the indicators for 2019 show that 70% of the world’s GDP is “slowing down.”
“I’m not suggesting that there is a recession,” she said, “but this is a delicate moment for the world.” The growth expectations for 2019 are currently set at 3.3% with hopes of seeing them go up again to 3.6% in 2020, an expectation that rests, however, on additional financial tightening, as well as an easing of the recent trade tensions between international players, namely China and the US.
She highlighted that the kind of sustainable growth the world needed was the one that could “lift the prospects of women, young people, the poor, and those who live in rural areas,” which would include the offer to secure the well-being of future generations.
With regards to women’s well-being and the fulfillment of their potential in Kazakhstan, she was pleased with the 65% of female participation in the work force, both in the public and private sectors, which is the highest percentage in the region, and “a benchmark in Central Asia.”
Lagarde pointed out that the Caucasus and Central Asia (CCA) region will continue to “play a key role” in stimulating economic growth, which so far has been close to 4% across the region, she reported.
Within the context of the 2019 Astana Economic Forum, the IMF’s Managing Director also met with Finance Ministers and Governors of Central Banks of the CCA region and Eurasian Union countries. This year, the Eurasian Economic Union celebrates its 5th anniversary, a unifying project that was first envisioned 25 years ago by Kazakhstan’s First President, Nursultan Nazarbayev.
Representing Georgia, a key player in the CCA region, Prime Minister Mamuka Bakhtadze stood behind the podium and extolled the vision of Kazakhstan’s leaders for the prosperous development of the whole CCA region, and asserted that the country is one of Georgia’s “most important partners.” A roadmap for an agreement to increase trade between the two nations was signed the same week. Bakhtadze underlined that Georgia is the only country in the region to have a Free Trade Agreement with the EU and China, and one of the first countries to join the Belt and Road initiative. “We are determined to keep this pace,” he said.
Known as the “Davos of Central Asia”, the Astana Economic Forum has brought together leaders and business experts from all around the world to debate and try to find solutions to the world’s economic and social challenges. The first editions took place in 2008 and this year the focus of the Forum was shaped around one axis: Inspiring Growth – People, Cities, Economies. All of these topics were explored in detail, with all their facets and inter-dependencies, over the course of two days and across more than fifty panel discussions and round tables.
Some of the luminaries and world leaders attending this year’s Forum included the 2018 Nobel Prize winner in Economics and former Chief Economist at the World Bank, Paul Romer; UN Women Deputy Executive Director, Åsa Regnér; Director of the Earth Institute at Columbia University, Jeffrey Sachs; UN’s Executive Secretary of the Economic and Social Commission for Asia and the Pacific, Armida Salsiah Alisjahbana; former Vice Chairman of the US Federal Reserve Board of Governors, Stanley Fischer; UNDP’s Director of the Regional Bureau for Europe and the CIS, Mirjana Egger; Nobel Peace Prize winner, Rae Kwon Chung; Harvard Professor of Economics and former Chief Economist at the IMF, Ken Rogoff, among many others.
In Paul Romer’s keynote speech, he regretted the fact that for many years, the majority of economists and politicians believed in the “fiction of a minimal state” as the ideal model. These days some companies are becoming so powerful that governments can no longer “make nor enforce laws” when it comes to such firms. In Romer’s view, an ideal government is narrow in the tasks it chooses to take on — leaving plenty of leeway for the market to act — but is strong enough to enforce the law every step of the way and for everyone. It is paramount to make sure that “big companies will do the best for everyone, not just for the few.”
The Nobel laureate finished his speech by warning the audience about the biggest risk the world faces now, which is that if leaders can’t deliver a narrow yet powerful government, the will of the people might morph into a blind desire “for a strong leader instead of a strong government. And history shows how dangerous that can be.”
The trade spat between China and the US was subject of constant discussion throughout the Forum. Former Vice Chairman of the US Federal Reserve Board of Governors, Stanley Fischer, stated that the US President is trying to do by imposing tariffs is not a “trivial change in policy.” He recalled how the US imposed tariffs in the 1930’s during the great depression, a contrast with the expansion of global trade right after the war, from about 1946 and until 2006. “My point is that we just don’t know what the effect of those tariffs would have been if World War II had happened.”
He shrugged off the attacks that President Trump has been conducting against the US Federal Reserve on the basis that the risk of inflation in the US is “a myth.” Fischer noted that if the Fed had reduced interest rates by 100 basis points, as President Trump had wanted, the consequences would have been severe. “The Fed won’t do it. They know it would be a mess.”
During the panel discussion about the current state of the Sustainable Development Goals (SDGs), Columbia Professor, Jeffrey Sachs, called the public’s attention to the fact that just this past week, the temperature in the Arctic reached 29 degrees Celsius. “The deterioration is happening a lot faster than we thought. We are already in a dire situation.”
He expressed concern over the fact that politicians seem to be fixed on the idea “of short term results,” not for the future that is needed. “The current political system does not align with our human needs because it is very ‘present oriented.’
Sachs restated the importance of the SDGs because the “is what really matters. Education, a safe climate, biodiversity, ending inequalities. “We need to end the existing bias in politics and business. Politicians and business incumbents -the fossil fuel industry, for instance- they need to redefine themselves, adapt sustainable models. It is long overdue.”