WEBVTT - The Stephanomics Global Preview for 2021 0:00:08.840 --> 0:00:11.840 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:11.880 --> 0:00:15.680 global economy to you. This time last year, Stephanomics celebrated 0:00:15.720 --> 0:00:17.759 the new year by asking some of Bloomberg's best and 0:00:17.800 --> 0:00:21.079 brightest what we could expect the next twelve months to bring, 0:00:21.520 --> 0:00:23.880 and we all completely failed to see what was coming. 0:00:24.520 --> 0:00:26.760 I'm not going to let that put me off another attempt, 0:00:26.920 --> 0:00:29.560 but I have taken the precaution of broadening the net 0:00:29.600 --> 0:00:32.640 a bit. Hopefully this lot will be even better and 0:00:32.760 --> 0:00:36.720 even brighter. We really do have a lot of firepower 0:00:36.760 --> 0:00:40.680 gathered on this zoom call today here in London, Bloomberg 0:00:40.720 --> 0:00:45.239 TVs pre eminent interviewer and correspondent at large, Francine Lacroix. 0:00:45.800 --> 0:00:49.360 We also have Business Week's senior economic correspondent and columnist 0:00:49.440 --> 0:00:53.000 Peter Ky, sitting in New York and dining in from Washington, 0:00:53.280 --> 0:00:58.320 tom Orlick, well known to this podcast as Bloomberg's chief economist. Finally, 0:00:58.320 --> 0:01:01.320 we have Sharon Chen. She's now in London, having just 0:01:01.400 --> 0:01:04.959 joined Bloomberg Green, but until recently she was sitting in 0:01:04.959 --> 0:01:08.440 the hot seat in China as Bloomberg's Beijing bureau chief. 0:01:09.160 --> 0:01:13.000 Welcome to everyone, and thank you so much. For being here, 0:01:13.400 --> 0:01:17.000 And I've already said we spent most of talking about 0:01:17.040 --> 0:01:20.080 something that was barely on anyone's radar at the end 0:01:20.120 --> 0:01:26.160 of the coronavirus. This is about looking ahead, not looking back. 0:01:26.640 --> 0:01:29.800 But very briefly, I wanted to start by asking each 0:01:29.840 --> 0:01:34.560 of you what the most memorable moment of was. I 0:01:34.600 --> 0:01:37.600 guess in a year that professional and personal got far 0:01:37.640 --> 0:01:41.880 too close together at times, it's hard to tell the difference, 0:01:41.920 --> 0:01:44.319 but I was I guess I'm talking professionally here, Peter 0:01:44.440 --> 0:01:48.040 Coy your most memorable moment, Well, Stephanie, you already said 0:01:48.080 --> 0:01:50.760 that the coronavirus was the shark that took us all 0:01:50.800 --> 0:01:54.960 by surprise. But my my biggest shark really was what 0:01:55.120 --> 0:01:58.360 came after that, which was in the United States when 0:01:58.880 --> 0:02:03.880 mask wearing, which scientists and doctors agree can help prevent 0:02:03.960 --> 0:02:08.280 the spread of the coronavirus, became a political statement, and 0:02:08.360 --> 0:02:11.680 not wearing a mask became a political statement where people 0:02:11.680 --> 0:02:15.720 who sided with Donald Trump felt that wearing a mask 0:02:15.760 --> 0:02:19.280 would somehow a slap in the President's face, and this 0:02:19.480 --> 0:02:24.440 had incalculable consequences for the health of the American people 0:02:24.440 --> 0:02:28.160 as well as the health of the US economy. So 0:02:28.360 --> 0:02:30.480 many lives could have been saved, and so many dollars 0:02:30.520 --> 0:02:33.639 of GDP could have been saved if only people had 0:02:33.680 --> 0:02:37.359 socially distanced and worn masks religiously, I should say. On 0:02:37.360 --> 0:02:40.480 on the positive, I think probably my surprise was just 0:02:40.840 --> 0:02:47.239 how quickly governments stepped in with fiscal support for economies, 0:02:47.440 --> 0:02:50.040 at least around the industrial countries, and the extent to 0:02:50.120 --> 0:02:53.799 which it did cushion the blow for so many households. 0:02:53.800 --> 0:02:56.880 We had a much smaller for hit on incomes by 0:02:56.919 --> 0:03:00.320 and large, with some important exceptions, than the hit the 0:03:00.400 --> 0:03:02.720 straightforward hit to the economy. So I guess that's the 0:03:02.760 --> 0:03:05.120 slightly more positive side of the government response, which we 0:03:05.120 --> 0:03:07.560 did actually see in the U S too, So that's 0:03:07.560 --> 0:03:12.080 a glass half fall. Sharon said, the credit virus was 0:03:12.080 --> 0:03:15.040 the obvious, It was made a lot of twenty memorable. 0:03:15.120 --> 0:03:18.240 But what was the most distinctive moment for you? Yeah, 0:03:18.280 --> 0:03:20.720 I mean for me, the moment that really stands out 0:03:21.320 --> 0:03:24.880 was the day they locked down Wuhan. I mean it 0:03:25.040 --> 0:03:29.240 was just incredible, like we had never experienced anything like that. 0:03:29.280 --> 0:03:32.440 We couldn't really understand what was happening, that they would 0:03:32.480 --> 0:03:36.680 just lockdown an entire city of millions of people, and 0:03:36.720 --> 0:03:39.600 then they they extended that to the whole of Hubei, 0:03:39.920 --> 0:03:42.520 which was more than fifty million people, and it was 0:03:42.560 --> 0:03:44.600 just so difficult to comprehend what was happening. And that 0:03:44.720 --> 0:03:47.720 was the moment it really hit home that you know, 0:03:47.840 --> 0:03:50.240 this was serious and it was going to be the 0:03:50.400 --> 0:03:54.840 major news story UM for the entire year. But other 0:03:54.840 --> 0:03:57.000 than that, I mean, I think the most surprising thing 0:03:57.040 --> 0:04:00.800 that happened was just recently in September, China coming out 0:04:00.840 --> 0:04:03.560 and saying that, you know, they want to achieve net 0:04:03.680 --> 0:04:07.720 zero carbon emissions by six it's the world's biggest carbon emitter. 0:04:07.960 --> 0:04:11.560 And leading up to President Jijumping's announcement at the u 0:04:11.720 --> 0:04:14.240 N you know, we had been getting a lot of 0:04:14.240 --> 0:04:17.839 signals that China was prioritizing economic growth over its climate 0:04:17.920 --> 0:04:22.320 commitments UM and since then we've seen UM eight out 0:04:22.320 --> 0:04:25.440 of the ten major economies, biggest economies in the world 0:04:25.440 --> 0:04:27.440 say they want to go to net zero as well. 0:04:28.480 --> 0:04:30.560 You're right, that was a big, a big positive shot 0:04:30.640 --> 0:04:34.480 we had in in in the autumn. Francine Loquax, I 0:04:34.520 --> 0:04:37.559 think the you know it surprised me is actually after 0:04:37.640 --> 0:04:40.200 ups and downs, is the fact that we believe Europe 0:04:40.440 --> 0:04:42.240 is now forced for good. You know, if you think 0:04:42.279 --> 0:04:47.080 back to late there was really possible political populism in Europe, 0:04:47.640 --> 0:04:49.440 and if you take it to the which is really 0:04:49.480 --> 0:04:52.760 hard hit by the COVID, you know, crisis, and you know, 0:04:52.800 --> 0:04:55.240 you could also say really botch the pandemic response. It 0:04:55.279 --> 0:04:58.080 now has more destined coronavirus of coronavirus in the UK. 0:04:58.560 --> 0:05:00.560 It just feels a lot closer to Europe. But then 0:05:00.560 --> 0:05:02.280 it did a your go back in twenty nineteen. I 0:05:02.279 --> 0:05:04.160 don't know if you remember, but you know we had 0:05:04.160 --> 0:05:07.400 then Mr Selvini saying that he felt closer to Moscow 0:05:07.400 --> 0:05:10.240 than Brussels. And the majority of Italians now believe that 0:05:10.279 --> 0:05:12.279 Europe will saved them because of the funds from the 0:05:12.320 --> 0:05:14.880 recovery fund. Of course they still have to allocate the 0:05:14.880 --> 0:05:18.039 money and to see whether it uses them wisely. But overall, 0:05:18.200 --> 0:05:21.760 it was this European union unity in the face of Brexit, 0:05:21.839 --> 0:05:24.080 in the face of COVID that I think I'll remember 0:05:24.120 --> 0:05:27.880 for and despite these ups and downs, it showed that 0:05:27.920 --> 0:05:31.799 actually Europe really does come together usually in times of crisis. 0:05:32.279 --> 0:05:34.240 Just recently I had a headline jump out of me 0:05:34.279 --> 0:05:39.680 a column by Ferdinando Giuliano and of Bloomberg that Italians 0:05:39.680 --> 0:05:42.760 are starting to like the Germans UM, and that's probably 0:05:42.760 --> 0:05:44.640 not also not a headline we would have expected to 0:05:44.680 --> 0:05:49.880 see twelve months ago. Tom Wallick, so I wanted to 0:05:49.920 --> 0:05:54.000 pick up on Peter's pessimism. UM, the failure of mask 0:05:54.080 --> 0:05:57.400 wearing in the United States was really striking. I think 0:05:57.400 --> 0:06:01.039 the failure of global coordination around the response to the 0:06:01.080 --> 0:06:05.479 coronavirus crisis was also really striking. If there was ever 0:06:05.560 --> 0:06:09.599 a moment for the global community to come together around 0:06:09.600 --> 0:06:14.680 a medical response and an economic response, surely this was it, UM, 0:06:14.760 --> 0:06:20.320 and that coordination has just really been notable by its absence. UM. Indeed, 0:06:20.360 --> 0:06:24.880 if we think about the world's most important relationship, the 0:06:24.920 --> 0:06:28.880 relationship between China and the United States, actually, over the 0:06:28.880 --> 0:06:33.360 course of the COVID crisis, it's got markedly worse. One 0:06:33.400 --> 0:06:35.720 thing that stuck out to me there was a moment 0:06:35.839 --> 0:06:39.120 over the summer where there was a coordinated series of 0:06:39.160 --> 0:06:43.719 speeches by senior US officials. We had Pompeo, the Secretary 0:06:43.760 --> 0:06:48.480 of State, um Bar, the Attorney General, O'Brien, the National 0:06:48.520 --> 0:06:52.839 Security Advisor, all coming out and in a coordinated way 0:06:53.640 --> 0:06:58.919 taking a really aggressive swing at China and framing the 0:06:59.040 --> 0:07:01.400 U S. China relations and ship not just as a 0:07:01.440 --> 0:07:05.760 relationship of economic competition, but almost as a kind of 0:07:05.800 --> 0:07:10.520 an existential struggle between democracy and a single party state, 0:07:10.880 --> 0:07:15.800 between capitalism and a state dominated economy. Um And. I 0:07:15.840 --> 0:07:20.440 find that really striking because until now, UM, those two 0:07:20.480 --> 0:07:23.640 things have been kind of compartmentalized. Right. There's been a 0:07:23.720 --> 0:07:27.200 view that even though there are some very important differences 0:07:27.480 --> 0:07:30.560 between the US and the West and the and China 0:07:30.640 --> 0:07:33.600 in terms of how society is organized, we can still 0:07:33.640 --> 0:07:37.480 cooperate in terms of trade. Perhaps we can cooperate on 0:07:37.560 --> 0:07:40.680 things like climate change. Um. And over the course of 0:07:40.680 --> 0:07:43.640 the COVID year that seemed to change. And I think 0:07:43.640 --> 0:07:45.720 it's going to be really interesting to see with the 0:07:45.720 --> 0:07:50.240 Biden administration coming in how they manage tensions across that 0:07:50.280 --> 0:07:54.200 broader range of subjects. Sharon turn you you mentioned that 0:07:54.240 --> 0:07:56.440 the lockdown and Whan. I remember we've spoken to a 0:07:56.440 --> 0:08:00.360 couple of times when you were engaging this year, once 0:08:00.400 --> 0:08:02.760 when you had just returned from Wuhan and you were 0:08:02.800 --> 0:08:08.320 going through quarantine having started at the center of this pandemic. 0:08:09.520 --> 0:08:12.080 We look at China now, the rest of the world 0:08:12.440 --> 0:08:14.600 looks at it and sees it coming out of this 0:08:14.800 --> 0:08:19.480 pandemic apparently almost unscathed. It's the only large economy that 0:08:19.520 --> 0:08:23.680 will grow this year, and the government, if anything, seems strengthened. 0:08:24.600 --> 0:08:27.000 When you were in China, is that what it felt 0:08:27.040 --> 0:08:29.840 like on the inside too, or has the system perhaps 0:08:29.880 --> 0:08:33.040 been shaken in ways that we can't see. Yeah, I 0:08:33.080 --> 0:08:36.679 mean I think that's generally right. When I left in October, 0:08:36.840 --> 0:08:39.480 I mean, everything was back to normal, like hot pot 0:08:39.559 --> 0:08:44.720 restaurants will packed, people eating, you know, sharing communal food, travel, 0:08:44.760 --> 0:08:47.240 domestic travel was back in full swing. You know, it 0:08:47.280 --> 0:08:49.400 really felt like life had returned to normal. And it 0:08:49.440 --> 0:08:52.080 was even more stark when I landed in London and 0:08:52.120 --> 0:08:54.880 it was like going back in time to the worst 0:08:54.920 --> 0:08:58.360 of the pandemic in China. So I think in that sense, 0:08:58.440 --> 0:09:01.120 you know, the economy really had has kind of gotten 0:09:01.160 --> 0:09:03.520 back to where it was just in the day to 0:09:03.600 --> 0:09:06.400 day kind of experience. And also, I think you're right 0:09:06.480 --> 0:09:09.480 that the way the government handled the pandemic and then 0:09:09.559 --> 0:09:13.680 how other governments outside China handled the pandemic really validated 0:09:13.720 --> 0:09:16.600 the Chinese model for a lot of people inside China. 0:09:17.000 --> 0:09:18.520 But I think that there are a lot of things 0:09:18.559 --> 0:09:21.880 below the surface that have shaken the system. You know, 0:09:22.120 --> 0:09:25.280 just like in every other country, the pandemic exacerbated in equality. 0:09:25.400 --> 0:09:28.000 Millions of microworkers lost their jobs, those in the service 0:09:28.000 --> 0:09:30.439 sector were hit extremely badly. I mean, that's the main 0:09:30.480 --> 0:09:33.640 problem the government faces now is supporting those groups of people, 0:09:33.720 --> 0:09:36.720 and in China that's on a massive scale. Um And 0:09:36.760 --> 0:09:41.000 we also see how it's become more internationally isolated because 0:09:41.040 --> 0:09:43.160 of the fallout from the pandemic, and all of that 0:09:43.240 --> 0:09:45.439 is also going to affect the economy and people who 0:09:45.440 --> 0:09:49.200 are dependent on exports and outside markets. Tom We've we've 0:09:49.240 --> 0:09:51.959 got a lot of China expertise on this program. Rightly, 0:09:51.960 --> 0:09:56.920 so because you lived many years in Beijing. Two looking ahead, 0:09:57.280 --> 0:09:59.920 do you think one is the year when China could 0:10:00.080 --> 0:10:03.920 solidate the games it's made in the last twelve months 0:10:03.960 --> 0:10:08.240 from handling the virus so effectively. So so, China is 0:10:08.280 --> 0:10:11.280 the only big economy which is going to grow this year. 0:10:11.640 --> 0:10:15.840 We think they'll expand around two percent. Next year, we 0:10:15.920 --> 0:10:20.520 think they'll grow around eight percent. So it's a kind 0:10:20.559 --> 0:10:23.760 of it's an irony of the COVID crisis that a 0:10:23.840 --> 0:10:28.360 problem which started in China in Wuhan as as Sharon 0:10:28.400 --> 0:10:33.080 mentions is actually going to end with China closing the 0:10:33.160 --> 0:10:36.280 gap in terms of g d P, in terms of 0:10:36.280 --> 0:10:41.600 economic capacity with the United States. I was actually just 0:10:41.679 --> 0:10:47.040 reading a big book about Putin and Putin's rule in Russia, 0:10:47.520 --> 0:10:50.440 and one of the points the author makes was that 0:10:50.920 --> 0:10:55.840 Putin was emboldened by the what he saw is the 0:10:55.960 --> 0:10:59.920 failure of the United States in response to Hurricane Katrie 0:11:00.520 --> 0:11:03.400 and how they didn't get ahead of that problem, and 0:11:03.440 --> 0:11:06.240 that this really shook Putin's view of America. He thought, 0:11:06.280 --> 0:11:09.560 God goodness, these guys, they're not any better than we 0:11:09.600 --> 0:11:13.000 are dealing with problems. And so maybe I can play 0:11:13.000 --> 0:11:15.559 a bit of a bigger role on the global stage. 0:11:16.320 --> 0:11:17.960 And I wonder if we're going to see some of 0:11:18.000 --> 0:11:22.320 that following the COVID crisis as well. China is going 0:11:22.320 --> 0:11:25.560 to come out of this economically stronger, but they're also 0:11:25.600 --> 0:11:29.320 going to come out of it emboldened with a sort 0:11:29.320 --> 0:11:32.120 of stronger belief in the relative strength of their own model. 0:11:33.080 --> 0:11:35.960 And how do you think China is viewing the Biden administration? 0:11:36.000 --> 0:11:37.600 I mean, is this is it? Is it the end 0:11:37.640 --> 0:11:42.360 of trade wars? I don't think so. Um, if we 0:11:42.440 --> 0:11:46.560 go back to two thousand and one. That moment when 0:11:46.679 --> 0:11:50.760 China joined the World Trade Organization. Part of the reason 0:11:51.120 --> 0:11:55.000 why there was scope for kind of win win cooperation. 0:11:55.520 --> 0:11:57.400 We give you a little bit, you give us a 0:11:57.400 --> 0:12:00.520 little bit, and everyone's better off is big because China 0:12:00.640 --> 0:12:03.559 was just so far behind in terms of the size 0:12:03.600 --> 0:12:07.599 of its economy and the capacity of its economy. And 0:12:08.120 --> 0:12:10.920 what we've seen in the last twenty years is that, 0:12:11.040 --> 0:12:13.400 partly as a result of that w t O entry, 0:12:13.640 --> 0:12:17.839 China has just accelerated up the global GDP rankings and 0:12:17.880 --> 0:12:20.600 they're now you know, the US can feel their sort 0:12:20.640 --> 0:12:22.840 of hot breath on their back. The kind of the 0:12:22.880 --> 0:12:26.720 competition is real, it's visceral, and we've seen US public 0:12:26.760 --> 0:12:31.880 opinion and global public opinion move very decisively against China. 0:12:32.600 --> 0:12:34.800 And I think what that means is that the room 0:12:34.840 --> 0:12:38.520 for maneuver for the Biden administration as they think about 0:12:38.520 --> 0:12:43.000 ways to reset the relationship with China is just pretty limited. 0:12:52.320 --> 0:12:55.600 Piece of coal. It's it's terrifying how long you've been 0:12:55.760 --> 0:12:58.640 reporting on the global economy in the U s. Economy 0:12:58.720 --> 0:13:01.920 for Business Week, more than thirty years. But if you 0:13:02.160 --> 0:13:04.520 think of all the administrations you've seen come and go 0:13:05.679 --> 0:13:10.880 looking at who's been announced for the Biden cabinet. Another 0:13:10.960 --> 0:13:16.240 key positions we know he's inherited and incredibly difficult terrain. 0:13:16.640 --> 0:13:20.960 How do you think the incoming president elect Biden is 0:13:21.080 --> 0:13:23.560 hoping to spend his first hundred days and what do 0:13:23.600 --> 0:13:27.360 you think could upset those plans? Of course, the tradition 0:13:27.400 --> 0:13:29.280 of the first one hundred days is that at a 0:13:29.320 --> 0:13:31.679 time when a new administration wants to hit the ground 0:13:31.760 --> 0:13:37.120 running notch some early winds, establish its ability to get 0:13:37.160 --> 0:13:40.720 things done, impressed people, and then maybe build on that. 0:13:41.280 --> 0:13:44.440 And that's exactly what Biden has in mind. So he's 0:13:44.480 --> 0:13:49.160 gonna first tackle the course the pandemic job number one. 0:13:49.720 --> 0:13:53.360 He wants to encourage people to wear masks for the 0:13:53.360 --> 0:13:56.200 first one days. He wants to have one hundred million 0:13:56.320 --> 0:14:00.320 vaccines distributed in the first one hundred days. He wants 0:14:00.360 --> 0:14:03.640 to rejoin the World Health Organization, which he can do unilaterally. 0:14:04.360 --> 0:14:07.520 Beyond that, he's looking to rejoin the Paris Climate Accord, 0:14:07.640 --> 0:14:11.480 which again he can do without anybody's permission. Re send 0:14:11.559 --> 0:14:15.480 some of the rules blocking traveler immigration from Muslim majority nations, 0:14:15.520 --> 0:14:18.680 again something within his power. Deal with some of the 0:14:18.679 --> 0:14:22.560 asylum rules on the Mexican border. Uh. These are all 0:14:22.640 --> 0:14:25.320 things that he can and will do early on and 0:14:25.520 --> 0:14:28.800 maybe establish a new tone for the administration. Other things 0:14:28.840 --> 0:14:30.760 are going to be much harder for him to do. 0:14:30.880 --> 0:14:35.800 For example, we're barely struggling now to accomplish a new 0:14:35.880 --> 0:14:40.400 coronavirus relief program. It's unlikely that a new Congress is 0:14:40.400 --> 0:14:44.200 going to want to immediately give him another one. And 0:14:44.240 --> 0:14:48.600 then we get into some of the real, uh, difficult issues, 0:14:48.680 --> 0:14:51.720 like well, he wants to raise taxes on the rich, 0:14:51.840 --> 0:14:54.160 he wants to raise the corporate income tax, he wants 0:14:54.160 --> 0:14:58.800 a gigantic green investment program two trillion dollars. So he's 0:14:58.880 --> 0:15:02.760 got his work cut out for him. So when we 0:15:02.800 --> 0:15:06.760 think about foreign policy, you know, we've tended to say 0:15:06.760 --> 0:15:09.760 it's a return to normalcy when it comes to the 0:15:09.840 --> 0:15:12.600 US and the rest of the world. And Tony Lincoln, 0:15:12.680 --> 0:15:16.200 the incoming Secretary of State, is very well known to 0:15:16.320 --> 0:15:20.120 people and the rest of the world. But what surprises 0:15:20.160 --> 0:15:21.920 do you think the rest of the world should look 0:15:21.920 --> 0:15:23.760 out for. I mean, is this really going to be 0:15:23.880 --> 0:15:29.000 back to the Obama Clinton type foreign policy or something different. 0:15:29.920 --> 0:15:32.440 I think some of the personnel does go back to 0:15:32.640 --> 0:15:35.800 Clinton in Obama, but the world has changed, and the 0:15:35.800 --> 0:15:38.840 biggest changes the U S relationship with China, which other 0:15:38.880 --> 0:15:41.640 people here on this call no more than I do. 0:15:41.720 --> 0:15:44.600 But what I can say is that anybody who thinks 0:15:44.680 --> 0:15:47.960 that relations with China going to clear right up now 0:15:48.000 --> 0:15:51.240 that there's a new president are in for a big disappointment. 0:15:51.680 --> 0:15:55.440 I mean, Tony Blincoln, the Secretary of State, Jake Sullivan 0:15:55.480 --> 0:15:59.720 as National Security Advisor, have been fairly hawkish on China, 0:15:59.800 --> 0:16:03.600 for up on the South China Sea, freedom of navigation operations, 0:16:03.600 --> 0:16:06.720 of anything, the US will be prosecuting more of those 0:16:07.400 --> 0:16:10.240 human rights as another example where Trump has pretty much 0:16:10.240 --> 0:16:13.160 given the Chinese a pass on human rights, and yet 0:16:13.320 --> 0:16:17.120 the US will under Blincoln, Sullivan and Biden of course, 0:16:17.600 --> 0:16:21.200 will be pushing on Hong Kong as well as the 0:16:21.200 --> 0:16:24.440 weakers in Western China. I think that there's there's going 0:16:24.480 --> 0:16:26.880 to be a lot of stress in that relationship. We 0:16:27.040 --> 0:16:29.040 spend a lot of time on China. We should, we 0:16:29.040 --> 0:16:34.080 should get back to Europe. With Francine Loquix. Overall, you 0:16:34.160 --> 0:16:37.520 spend a big chunk of most of your days talking 0:16:37.560 --> 0:16:41.240 to senior business leaders and policymakers. What do you think 0:16:41.280 --> 0:16:44.320 that the European elite if we can say that is 0:16:44.360 --> 0:16:47.200 focused on For one, I mean there's a lot of 0:16:47.440 --> 0:16:51.680 obviously a lot of countries that are still in renewed lockdown. 0:16:52.080 --> 0:16:54.360 Do you think they are managing to lift their eyes 0:16:54.480 --> 0:16:57.480 up from that or they just too caught up with 0:16:57.520 --> 0:17:00.760 the COVID crisis still well stuff, And I feel like 0:17:00.760 --> 0:17:02.480 they try and look up, and then every time they 0:17:02.480 --> 0:17:04.880 try and look up, there's either you know, another lockdown 0:17:04.920 --> 0:17:07.400 or some kind of stuff and start scenario. So they're 0:17:07.520 --> 0:17:10.000 very focused on the recovery. There are probably two main 0:17:10.119 --> 0:17:13.160 risks to Europe, you know, and to the outlaw forced 0:17:13.280 --> 0:17:15.200 there's this path in the second wave of the pandemic 0:17:15.320 --> 0:17:18.200 unclear to be honest for me where it goes, because 0:17:18.200 --> 0:17:19.960 if you look at the effect of the rollout of 0:17:20.000 --> 0:17:23.320 the vaccine, you know, I wouldn't underestimate the challenges of 0:17:23.359 --> 0:17:26.280 delivering this to large waves of the population. And I 0:17:26.320 --> 0:17:28.320 also would point to the fact that we still don't 0:17:28.359 --> 0:17:30.439 know whether you can still pass it on. Even if 0:17:30.440 --> 0:17:33.560 you get the vaccine on, then the recovery fund, I 0:17:33.560 --> 0:17:37.120 think there's a real questions amongst newsmakers and chief executive 0:17:37.119 --> 0:17:39.639 about where the money goes. So we have big words, 0:17:39.680 --> 0:17:42.359 big ideas in Europe, the Deal and climate change. Marcal 0:17:42.400 --> 0:17:46.640 also lately calling for this health union. But actually leaders 0:17:46.920 --> 0:17:49.080 know that they need to be more aggressive in cutting 0:17:49.080 --> 0:17:52.480 greenhouse gas emissions over the next decade. That's sure been stamped, 0:17:52.760 --> 0:17:55.080 but for chief executives, they want to know where where 0:17:55.080 --> 0:17:57.840 are these projects, where the money goes, and so what 0:17:57.880 --> 0:18:00.000 they're worried about is that you have project but actually 0:18:00.080 --> 0:18:02.439 the money gets squandered like it has in the past. 0:18:02.520 --> 0:18:04.959 So I think the next six months is really make 0:18:05.080 --> 0:18:07.600 or break. And the other thing very quickly solvency. And 0:18:07.640 --> 0:18:10.880 Mario Druggi was talking about that is that if if 0:18:11.000 --> 0:18:15.000 you know government programs run out one who do you 0:18:15.040 --> 0:18:17.679 say for companies? And are you saving the wrong companies 0:18:17.960 --> 0:18:20.800 that actually shouldn't be saved because of this huge transformation 0:18:20.840 --> 0:18:24.120 of the economy. Well, and something that Mario Drugging when 0:18:24.119 --> 0:18:26.160 he was ahead of the European Central Bank you ushould 0:18:26.160 --> 0:18:28.520 talk about a lot was needing to have fiscal support 0:18:28.640 --> 0:18:31.840 along with the monetary fiscal action. We did, as you 0:18:31.840 --> 0:18:33.720 said at the start, we did see that this year 0:18:34.800 --> 0:18:38.639 maybe with this Biggieu Recovery fund, we start to see 0:18:39.280 --> 0:18:45.400 deeper collaboration risk sharing on the fiscal front among European economies. 0:18:46.160 --> 0:18:50.320 What's going to determine whether that really happens over the 0:18:50.320 --> 0:18:52.800 next year or so, that whether that grows or whether 0:18:52.840 --> 0:18:55.879 it ends up being just a one off. So I 0:18:55.920 --> 0:18:58.080 think the first six months of the Europe would probably 0:18:58.119 --> 0:19:00.080 be a reckoning for Europe. A lot will the and 0:19:00.240 --> 0:19:03.560 on how economy is fare next year, whether the solvency 0:19:03.600 --> 0:19:06.160 crisis takes hold and then gives way to populous leaders 0:19:06.160 --> 0:19:08.359 in Europe. If you look at the political dimension in Europe, 0:19:08.640 --> 0:19:11.840 it should never be underestimated, especially when you're talking about Europe, 0:19:11.880 --> 0:19:14.840 you know, coming more together. It's unclear where we land 0:19:14.880 --> 0:19:17.480 post pandemic, so we have to really, you know, think 0:19:17.520 --> 0:19:20.480 about that and not be too optimistic. Will probably have 0:19:20.480 --> 0:19:22.960 an adjustment, We may have some unwinding of some of 0:19:23.000 --> 0:19:26.240 the policies. But if you're you're optimist and you look 0:19:26.240 --> 0:19:28.560 at the past and actually Europe does not really have 0:19:28.680 --> 0:19:32.679 any undoing progress on the integration front apart from Brexit, 0:19:32.720 --> 0:19:34.560 so you could be optimistic that you know, they're not 0:19:34.600 --> 0:19:38.199 going to undo what they've done so far. Tom if 0:19:38.280 --> 0:19:40.240 we step back from this and think about where the 0:19:40.680 --> 0:19:44.159 where the world has headed economically in one I know 0:19:44.280 --> 0:19:47.920 that your team has been pulling together. It's it's forecasts. 0:19:47.960 --> 0:19:51.720 Briefly tell us what you're expecting, and I guess also 0:19:51.840 --> 0:19:54.680 highlight what you think could go go right or wrong. 0:19:54.960 --> 0:19:58.879 We're expecting growth for the global economy around five percent 0:19:59.200 --> 0:20:03.280 next year, so pretty impressive rebound. It's not quite a 0:20:03.359 --> 0:20:07.600 v UM, but it's substantial. It's a substantial portion of 0:20:07.640 --> 0:20:11.040 the upswing of the v Within that, of course, drilling 0:20:11.040 --> 0:20:15.359 into the country detail, people talk about comorbidity is making 0:20:15.520 --> 0:20:21.320 the COVID virus more serious for individuals. There are also 0:20:21.400 --> 0:20:25.280 some co morbidity ease that make the economic impact more 0:20:25.359 --> 0:20:30.359 serious for different countries. UM Peter sort of already suggested it. 0:20:30.400 --> 0:20:33.840 But there's the trust deficit in the United States, which 0:20:33.840 --> 0:20:36.679 stymied the public health response and is going to deepen 0:20:37.000 --> 0:20:40.520 the crisis and slow the recovery. UM In the UK 0:20:41.200 --> 0:20:45.199 Brexit now approaching its end game. That combination of the 0:20:45.200 --> 0:20:48.359 Brexit hit and the virus hit is going to be 0:20:48.400 --> 0:20:51.600 a problem for the United Kingdom, and then in countries 0:20:51.760 --> 0:20:56.400 like Italy with very high debt levels. Again some additional 0:20:56.480 --> 0:20:58.840 burdens which are going to mean the recovery from the 0:20:58.880 --> 0:21:02.480 COVID hit is lower than it otherwise would be. But 0:21:02.520 --> 0:21:04.800 I wonder whether will be surprised by the speed of 0:21:04.840 --> 0:21:08.320 the bounce back. In many economies, there is such a 0:21:08.960 --> 0:21:10.879 maybe I'm just speaking personally, but this is such a 0:21:10.880 --> 0:21:14.200 great desire to go back to normal and maybe even 0:21:14.240 --> 0:21:16.439 double up on holidays and other things that one has 0:21:16.440 --> 0:21:20.440 not been able to do. Um. There is a view 0:21:20.480 --> 0:21:24.240 that says that that kind of bounce back could produce inflation. 0:21:25.040 --> 0:21:30.560 What do you think? So, we see wide output gaps 0:21:30.600 --> 0:21:33.400 as far as the I can see. And when you've 0:21:33.440 --> 0:21:36.600 got a wide output gap, you've got resources which are 0:21:36.600 --> 0:21:39.840 not being used, You've got people who wants lots of 0:21:39.880 --> 0:21:44.879 spare capacity and um, and so you don't have inflation. UM. 0:21:45.240 --> 0:21:49.359 So inflation is not in our view, It's not in 0:21:49.359 --> 0:21:53.960 our two view, but that doesn't mean it isn't a risk. 0:21:54.320 --> 0:21:58.760 We've got some powerful forces at work. We've got deglobalization, 0:21:59.119 --> 0:22:03.520 which means that those cheap Chinese or Vietnamese imports which 0:22:03.520 --> 0:22:07.560 have been dragging on prices and denting workers capacity to 0:22:07.600 --> 0:22:11.280 negotiate for more money in the West. Um, that sort 0:22:11.320 --> 0:22:14.119 of drag on inflation is going to be reduced. UM. 0:22:14.440 --> 0:22:18.320 We've got more progressive politicians running for office and being 0:22:18.320 --> 0:22:22.520 elected to office, potentially with policies like pushing up the 0:22:22.520 --> 0:22:26.560 minimum wage, and perhaps, as you suggest, Stephanie, the economy 0:22:26.600 --> 0:22:31.119 could just come roaring back more quickly than anyone imagines. Um, 0:22:31.359 --> 0:22:36.520 So inflation is not in our forecast for two as 0:22:36.520 --> 0:22:40.679 a substantial risk, Um, we might be wrong. If it 0:22:40.720 --> 0:22:43.119 does come back, that's going to put central banks in 0:22:43.160 --> 0:22:47.480 a very very difficult position there in this extraordinary spot 0:22:47.920 --> 0:22:52.080 where they're essentially printing money to finance fiscal stimulus, and 0:22:52.160 --> 0:22:56.880 they can do that because inflation is entirely subdued. As 0:22:56.920 --> 0:22:59.399 soon as inflation starts to come back, they're going to 0:22:59.440 --> 0:23:03.000 be in a very difficult position trying to balance and 0:23:03.119 --> 0:23:07.240 find an impossible balance between their inflation fighting mandate and 0:23:07.280 --> 0:23:12.080 their financial stability mandate. Well, Francine, I can exclusively revealed 0:23:12.119 --> 0:23:13.879 that the head of the European Central Bank has a 0:23:13.920 --> 0:23:17.400 serious soft spot for you. When Christine Legarde was head 0:23:17.400 --> 0:23:20.159 of the IMF, still I was I saw her for 0:23:20.280 --> 0:23:22.560 something else and I mentioned I was going to Bloomberg, 0:23:22.800 --> 0:23:26.000 and she pulled. She sort of paused with this this 0:23:26.080 --> 0:23:29.680 sort of look in her eye of joy, saying ah, 0:23:29.720 --> 0:23:35.960 we're Francine loquise um. So you there's probably around the 0:23:35.960 --> 0:23:38.280