The View | ‘It’s technology, stupid’ – those who say trade is driving inequality and populist politics are looking in the wrong place
- The news tends to follow trade wars and reports of downgraded growth, but we should look at technological disruption
- Economists and the IMF are starting to draw attention to its impact on labour markets and the challenges of responding
Amid the inevitable talk of tariffs and populism, however, there’s some important thinking afoot among the IMF’s economists – the looming threat to a globally integrated economy may be less about Chinese subsidies and more about the march of technological progress.
If true, bankers and investors should all stop bemoaning the drama around Brexit and tariff escalation and start thinking hard about how we adopt new technology and train the workforce. Machine learning, automation and robotics, the research suggests, is likely to do more to undermine political cohesion and global growth than any trade skirmishes ahead.
Of course, as markets echo each trade headline and every consumer data point, investors will inevitably focus this week on further downgrades to global growth forecasts. Ninety per cent of the world’s economy is now officially slowing this year, according to the IMF, a sharp reversal of the situation just two years ago when growth for three-quarters was speeding up.
There will also be hand-wringing around models that predict a major downturn might trigger US$19 trillion in corporate defaults – more than the damage caused by the financial crisis.