Tariffs And Protectionism Can't Stop Globalization And Economic Growth
(Kitco News) - Despite growing populism and protectionist policies emerging from several major countries, globalization is still alive and strong.
In a panel discussion featuring prominent political and economic figures at the International Economic Forum of the Americas in Montreal, the topic of trade wars and their impact on global growth was debated, with the panelists concluding that globalization prevails and takes on many forms.
Global financial markets have seen relatively little volatility despite heightened geopolitical tensions, owing greatly to the economic stability that international connectiveness has brought, said Jane Buchan, CEO of PAAMCO.
“What we see a lot of these days is a lot of individual reaction, for example, Italian bonds,” Buchan said.
Italian bonds yields saw the biggest single-day surge on record on May 29th as political turmoil escalated in the country. Safe-have assets like gold rallied in response, but volatility subsided shortly after following a forming of an Italian coalition, bringing political stability and reassuring financial markets.
Buchan added that investors can best hedge against knee-jerk reactions in markets by spreading capital across many asset classes. “Diversification is the only free lunch,” she said.
Ibukun Awosika, chairman of the First Bank of Nigeria, said that the in today’s world, the concept of globalization extends beyond merely trade and touches on how individual citizens are inherently engrained in a “global” culture.
“I think the place to start from is, first and foremost, how does a citizen of the world now see the world? Because it is becoming increasingly difficult to define a citizen of the country,” Awosika said.
The first woman ever to be appointed chairman of the First Bank of Nigeria noted that due to the ease at which citizens connect with each other through technology, it is nearly impossible to stem the spread of globalization unless governments forcefully oppress and “isolate” their citizens.
Still, globalization’s survival does not come without challenges. The panelists agree that the danger of NAFTA’s dismantling, following U.S. President Donald Trump’s trade tariffs and his allies’ subsequent retaliatory measures, presents a major obstacle to global growth.