We constantly hear from the finance ministers across Europe that its
citizens must accept austerity budgets and all must expect to live on
Even the International Monetary Fund leaders cry the same story – they
have done this for decades as they rescue fallen regimes: all must
protect their falling reserves of cash. Yet in the US we see their
pertinent indices have been growing over the last six months or so –
productivity is up, unemployment is down and their CEO’s sentiment
about business prospects is up.
The US glows once more, it seems to be escaping its recession. China
suffered uncertainty through the period of its leadership change – but
which nation does not have that issue? We accept its projected GDP has
fallen a little to about 7.5 per cent (year on year at the last
quarter) reflecting its decreasing trend over the last seven quarters,
but its many productivity indicators remains strong. For instance,
throughputs in its major ports are steady or at record highs, there is
continued installation of more capacity in its ports, roads, railways
and its airfreight – all show upwards strengths.
A year ago the Institute for International Finance (IIF) was
predicting the oil-exporting Arab states would see a growth of 6.5 per
cent, though the oil-importing Muslim states would contract slightly.
Of course, many states are now recovering from their ‘revolutions’, or
are in turmoil, or fearing uprisings: these are indeed turbulent
times. And in turbulence businesses will remain tentative and
conservative in outlook.
The IIF suggested the Arab exporters’ collective account surpluses
would fall from $322 billion in 2011 to $225 billion in 2012, though
their gross financial assets would top $2,000 billion. That is a lot
of real capital that could be allocated for their benefit.
It seems essential that we move from a world of continued austerity to
one of growth. Yet by ‘growth’ I do not wish to return to the
hedonistic times of rapidly increasing debt burden as many made
promises to repay that they could not keep – from individuals with
mortgages to massive banks, and even states themselves. A return to
growth would offer jobs to those presently out of work around the
globe, and so with some spare cash in their pockets that would spend
and thus drive their local economy upwards. That would quickly affect
global sentiment and free up locked assets to be applied to new
ventures – thereby revitalising the global cash flow. There are few
regions with spare cash – one is China, and the other is the Gulf
I suggest a two-fold solution: to revamp the education system
beginning with crèche and infant schools. Teaching new, vibrant, open
curricula will develop world-class citizens in due course, but we will
have to wait 20 or more years to see the result.
The second thrust offering a more instant result is to allocate
sovereign wealth funds to new ventures, almost as micro financing.
This would kick-start new ventures outside the oil industries. These
funds might also be deployed globally to help the economies of Europe,
the US and even China. That will stimulate global cash flows and
almost instantly increase the demand for oil products that will uphold
the very funds that initiated global growth. I’m sure these issues
will be discussed in Ras Al Khaimah in a few days as local and
regional business leaders gather for a brainstorming session.
Frank-Jürgen Richter is founder and chairman of Horasis, a global
visions community. Horasis is hosting the Global Arab Business Meeting
in Ras Al Khaimah, 9-10 December, 2012
Horasis is a global visions community committed to enact visions for a sustainable future. (http://www.horasis.org)
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