Latest / Stephanomics / Lost Opportunities for Asia’s Lockdown Generation

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Lost Opportunities for Asia’s Lockdown Generation · Stephanomics

• 0:00
  Speaker 1: The plan for me is always learning, find new opportunities,
• 0:03
  Speaker 1: and never limit yourself. I am always learning, I am
• 0:07
  Speaker 1: always trying to find new opportunities. If you can say
• 0:12
  Speaker 1: that you can do that, I think there's nothing to
• 0:14
  Speaker 1: be scared of. Hello and welcome to Stephanomics, the podcast
• 0:25
  Speaker 1: that brings the global economy to you. What you heard
• 0:28
  Speaker 1: there was the voice of youthful optimism twenty year old
• 0:31
  Speaker 1: punnies from Bangkok. For most of the past fifty years.
• 0:34
  Speaker 1: That optimism would have been well founded. Any young person
• 0:37
  Speaker 1: growing up in one of the fast growing Asian economies
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  Speaker 1: could expect to end up comfortably better off than their parents.
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  Speaker 1: But it doesn't feel that way for those just entering
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  Speaker 1: the jobs market in The pandemic has hit job prospects
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  Speaker 1: for young people in Asia hardest of all. They're calling
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  Speaker 1: it the lockdown generation, and Bloomberg Senior Asia Economy correspondent
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  Speaker 1: end the Current is going to tell us all about
• 1:02
  Speaker 1: them a little later. But this week I also wanted
• 1:05
  Speaker 1: to give you a sneak preview of some smart analysis
• 1:08
  Speaker 1: we've been pulling together for Bloomberg's New Economy Forum, which
• 1:11
  Speaker 1: will be entirely online this year but starts on November six.
• 1:16
  Speaker 1: All the Bloomberg economists have been put to work on this.
• 1:19
  Speaker 1: Later on we'll hear Eurozone economist may have a Kuzin
• 1:22
  Speaker 1: tell us about a project she's done looking at how
• 1:25
  Speaker 1: climate change could affect the global economy under different scenarios.
• 1:30
  Speaker 1: But first, our chief economist, Tom Olig, a great friend
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  Speaker 1: of the podcast, is here to give us an overview
• 1:35
  Speaker 1: of this special report. Tom, I've got the report in
• 1:40
  Speaker 1: my hands, hot off the presses. It's going to be
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  Speaker 1: available on the Bloomberg New Economy Forum website any minute now,
• 1:46
  Speaker 1: which is a rare treat for those of you who
• 1:48
  Speaker 1: don't usually get to see Bloomberg's economic research. There's so
• 1:52
  Speaker 1: much here, but I wanted to focus Tom on your
• 1:55
  Speaker 1: projections for what the world could look like in twenty
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  Speaker 1: You're a brave man looking that far ahead. But if
• 2:03
  Speaker 1: you step back with that kind of long term view,
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  Speaker 1: I guess you can get to the nub of the
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  Speaker 1: big forces driving the global economy. What different scenarios did
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  Speaker 1: you think about? Well, Stephanie, let's keep in mind that
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  Speaker 1: I just published a book called China, The Bubble That
• 2:19
  Speaker 1: Never Pops, So clearly you're talking to someone who's who's
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  Speaker 1: not afraid of leaving hostages to fortune. So we're looking
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  Speaker 1: out to the world in and clearly there's a huge
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  Speaker 1: amount that could change between now and then, and we're
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  Speaker 1: seeing in how a pandemic can shape the trajectory for
• 2:39
  Speaker 1: major economies. But what we've done is we've used a
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  Speaker 1: growth accounting framework, so we've looked at how demographics is
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  Speaker 1: going to change, We've looked at the likely pathway for
• 2:50
  Speaker 1: capital spending and productivity growth, and by doing that, we've
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  Speaker 1: put together baseline forecasts for GDP growth over the next
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  Speaker 1: three decades. And then we've layered on top of those
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  Speaker 1: scenarios for some of the mega trends globalization, climate change,
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  Speaker 1: and how they could shape the outlook. So one of
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  Speaker 1: the one of the pieces you did, I guess it's
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  Speaker 1: a familiar story in a sense, the shift in economic
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  Speaker 1: power from west to East that we expect to see
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  Speaker 1: happen in that time and that, but the numbers are
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  Speaker 1: quite significant. Yeah, So for the last seventy years, there's
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  Speaker 1: been a period of really remarkable stability in the sort
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  Speaker 1: of the economic balance of power. We've had the US
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  Speaker 1: and Europe firmly in the driving seat, and the intellectual
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  Speaker 1: consensus has been centered around the benefits of free markets
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  Speaker 1: and the power of democracies to drive economic dynamism. Now,
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  Speaker 1: in the last fifteen twenty years, we've seen the beginning
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  Speaker 1: of a transition. China is rising, India are coming up
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  Speaker 1: behind them. So what our forecast show is that this
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  Speaker 1: is really just the beginning of the transition, and in
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  Speaker 1: the next thirty years we're going to see China, India
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  Speaker 1: other Asian emerging markets like Indonesia rising up the global rankings.
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  Speaker 1: By the time we get to twenty fifty, China will
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  Speaker 1: firmly be in the number one spot, India we think
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  Speaker 1: will be number three and closing the gap with the
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  Speaker 1: United States, and Indonesia could well be up in the
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  Speaker 1: big league as well. Now, as that happens, it's not
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  Speaker 1: just a geographical shift, right, It's not just a shift
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  Speaker 1: from west to east, it's also a shift from advanced
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  Speaker 1: economies to emerging markets. And it's a shift from economies
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  Speaker 1: which operate on a free market principle to economies like
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  Speaker 1: China and in a different way, India that have a
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  Speaker 1: much higher degree of state intervention. And that's actually that
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  Speaker 1: is a very very striking so so what what what's
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  Speaker 1: the numbers there in terms of the share of the
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  Speaker 1: global economy that, if you like, in democratic hands versus
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  Speaker 1: nondemocratic and how does that change? Um so, um so.
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  Speaker 1: So what we've done is we've interacted our forecasts with
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  Speaker 1: the classifications of different societies by Freedom House, and Freedom
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  Speaker 1: House classify societies into free so that's kind of a
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  Speaker 1: functioning democracy, partly free, so that's the society which has
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  Speaker 1: some democratic um aspect, but you wouldn't characterize it as
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  Speaker 1: a fully functioning economy and not free so that's single
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  Speaker 1: party states. Um and So when we interact our forecasts
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  Speaker 1: with those social classifications, what we see is that the
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  Speaker 1: share of the global economy, which is which is controlled
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  Speaker 1: by free democracies is going to shrink from around eighties
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  Speaker 1: six percent in two thousand two around six and the
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  Speaker 1: share which is controlled by partly free and not free
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  Speaker 1: societies is going to rise all the way up from
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  Speaker 1: about four to about so a huge shift in the
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  Speaker 1: sort of the geographical composition of the global economy, the
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  Speaker 1: sort of the share of the global economy that's classified
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  Speaker 1: as free market versus state interventionist, but also that political
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  Speaker 1: shift as well, a much larger share of global output
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  Speaker 1: is going to be coming from non democratic states, and
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  Speaker 1: you've spent a lot of time in China, I mean,
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  Speaker 1: it is quite I wonder whether you think that the
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  Speaker 1: way that China has responded to the COVID thread could
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  Speaker 1: make even these projections turn out to be an underestimate
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  Speaker 1: of China's what China's standing is going to be in
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  Speaker 1: a few years time. I mean, many people think they
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  Speaker 1: have vaulted several years a head of the of the
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  Speaker 1: West by being able to manage this crisis so effectively
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  Speaker 1: at a time when particularly the US and Britain was
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  Speaker 1: really floundering. Right So, so one of the things that
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  Speaker 1: could throw these projections off are a major crisis, right um,
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  Speaker 1: and a lot of people look at China and they
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  Speaker 1: think there's a big financial crisis coming down the road
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  Speaker 1: because China's taken on so much debt, and if that happens,
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  Speaker 1: clearly it would put a dent in China's growth trajectory.
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  Speaker 1: What we've seen in though, as you know, is this
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  Speaker 1: global pandemic catastrophic impact across major economies, but China has
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  Speaker 1: really come out of it first and come out of
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  Speaker 1: it fastest. So our forecast is for two percent growth
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  Speaker 1: in China this year. We think they'll come back to
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  Speaker 1: eight percent growth next year. No other major economy is
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  Speaker 1: going to do so well. So ironically, even though the
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  Speaker 1: COVID crisis started in China, when we come out of it,
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  Speaker 1: it could well be that China has accelerated that process
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  Speaker 1: of narrowing the gap with the United States. Now. One
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  Speaker 1: view of at least part of what the Trump administration
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  Speaker 1: has been doing the last few years, and we've reported
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  Speaker 1: so much on this podcast, is he was trying to
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  Speaker 1: fight the kind of arithmetic and dynamic that you've just outlined.
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  Speaker 1: He was trying to make sure that the US didn't
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  Speaker 1: fall behind in terms of its share of global economy,
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  Speaker 1: and quite the same way that you've described. I mean,
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  Speaker 1: is there anything that the so called West, the US
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  Speaker 1: and Western Europe can do to change the outcome in
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  Speaker 1: in a sort of serious way. Yeah. So there's there's
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  Speaker 1: a phrase which you often see in Chinese policy documents,
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  Speaker 1: ban hoard um. It's roughly translates as do your own
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  Speaker 1: work well. Right, the last four years have really been
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  Speaker 1: a period where the US has focused on attacking China. Right,
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  Speaker 1: let's put tariffs up let's make it harder to old
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  Speaker 1: technologies to China. Let's try and break up big Chinese
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  Speaker 1: internet companies. There hasn't been a lot of investment in
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  Speaker 1: US education, a lot of investment in US infrastructure, a
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  Speaker 1: lot of investment in US research and development. Now, if
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  Speaker 1: the US wants to do its own work well and
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  Speaker 1: accelerate great at home, then I think a sort of
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  Speaker 1: a smart strategy would be to continue that advocacy for
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  Speaker 1: sort of a level playing field free markets globally, but
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  Speaker 1: also make those investments which drive growth potential at home
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  Speaker 1: as well. It's almost a shame that we haven't got
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  Speaker 1: President Trump doing his next summit with the Chinese leader
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  Speaker 1: to be told do your own work well. I think
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  Speaker 1: that would go down extremely well. We should just touch
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  Speaker 1: on the other piece of this research, which was looking
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  Speaker 1: at the impact over a thirty year timeframe of ath
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  Speaker 1: of less globalization, or indeed a reversal of globalization. There's
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  Speaker 1: been so much talk about that in the wake of
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  Speaker 1: the both Donald Trump trade policies but also the COVID pandemic.
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  Speaker 1: What what did you find there and what were you
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  Speaker 1: looking at? So um, it's not just US China relations
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  Speaker 1: which are breaking down right. We have Brexit, the UK
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  Speaker 1: stepping away from its trade relationship with the European Union. UM,
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  Speaker 1: we have covid Era concern about control of supply chains.
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  Speaker 1: Countries which in the first half of this year could
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  Speaker 1: make their own masks and make their own antibiotics and
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  Speaker 1: make their own ventilators were in a better position that
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  Speaker 1: countries than countries which were sourcing those from overseas. So
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  Speaker 1: there's a kind of there's a global trend towards um
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  Speaker 1: deglobalization that is potentially a very serious problem for global growth.
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  Speaker 1: A world where global trade and technology and financial ties
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  Speaker 1: start to splinter is going to be a smaller world
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  Speaker 1: than a world where they continue you to strengthen, and
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  Speaker 1: it also has distributional consequences. Globalization is good for all countries,
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  Speaker 1: but it's especially good for emerging markets, which are aiming
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  Speaker 1: to export their way to prosperity and catch up rapidly
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  Speaker 1: to the global technology frontier. So we explored a couple
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  Speaker 1: of scenarios, one where global ties continue to strengthen, and
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  Speaker 1: one where global ties splinter, back to the level in
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  Speaker 1: two thousand, just before China joined the w t O,
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  Speaker 1: just as Europe was creating its single currency. The consequences
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  Speaker 1: of that for the consert The difference between those two
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  Speaker 1: scenarios for global growth is really enormous. The negative impact
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  Speaker 1: of deglobalization is much more severe for those emerging markets,
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  Speaker 1: places like China, places like Vietnam. And I was going
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  Speaker 1: to ask you that, So, who are the biggest losers?
• 11:56
  Speaker 1: Are those countries? I guess who would have otherwise have
• 11:59
  Speaker 1: done the best on the integration scenario. Yeah, it's the
• 12:03
  Speaker 1: it's your it's your Asian it's the Asian emerging markets.
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  Speaker 1: It's China, it's Vietnam. A bit further up the development spectrum,
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  Speaker 1: it's Korea. It's the countries that have done the best
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  Speaker 1: from gaining global export market share and absorbing foreign technologies.
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  Speaker 1: They're the biggest winners from globalization. They'd be the biggest
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  Speaker 1: losers if globalization now spins into reverse. Tom Warlick, thank
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  Speaker 1: you very much. Great to be in, Stephanie. Well, we're
• 12:36
  Speaker 1: not assuming that globalization will go into reverse. But the
• 12:39
  Speaker 1: COVID crisis has given young people in Asia a taste
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  Speaker 1: of a world in which all the economic opportunities have
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  Speaker 1: suddenly dried up. They're calling it the lockdown generation. Bloomberg's
• 12:50
  Speaker 1: and the current has more here in Hong Kong. While
• 12:56
  Speaker 1: the pandemic is under control, the economy remains in recession.
• 13:01
  Speaker 1: Unemployment is that a fifteen year high, and youth unemployment
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  Speaker 1: has surged during the crisis. Of course, the story of
• 13:09
  Speaker 1: youth unemployment is playing out across the Asia region, a
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  Speaker 1: part of the world that is home to a majority
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  Speaker 1: of those aged fifteen to twenty four. It's why the
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  Speaker 1: Asian Development Bank and International Labor Organization are warning of
• 13:24
  Speaker 1: a lockdown generation. We reached out to young people and
• 13:28
  Speaker 1: experts across the region to gauge how deep this job's
• 13:32
  Speaker 1: crisis is. Vincent Laud, aged twenty, is among those in
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  Speaker 1: Hong Kong who's unemployed and looking for work, in his case,
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  Speaker 1: possibly as a waiter. It's very hard to find you all.
• 13:44
  Speaker 1: Now when Padelica comes in, a lot of a lot
• 13:48
  Speaker 1: of comedies start to firing the employee. I kind of
• 13:52
  Speaker 1: afraid of unlocking any job you guys, I don't think
• 13:55
  Speaker 1: they got hired too much people. Yeah, I'm not expecting
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  Speaker 1: to a job player soon. I spoke with Felix Weibenkoff
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  Speaker 1: of the International Labor Organization, who is based in Bangkok.
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  Speaker 1: So the COVID nineteen pandemic has led to a massive
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  Speaker 1: disruption to the economies and labor markets in in Asia Pacific,
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  Speaker 1: and we found that they have disproportionate impacts on unused employment,
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  Speaker 1: now threatening to create a lockdown generation. The regions fast
• 14:23
  Speaker 1: growing economies for decades have offered millions of young people
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  Speaker 1: the chance to do better than their parents, a path
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  Speaker 1: to upward mobility now at risk as youth unemployment source.
• 14:35
  Speaker 1: Young people are losing jobs at a faster rate than
• 14:38
  Speaker 1: older generations because almost half are clustered in the four
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  Speaker 1: economic sectors hurt most by the COVID nineteen pandemic wholesale
• 14:46
  Speaker 1: and retail, manufacturing, business services, and accommodation and food. Young
• 14:51
  Speaker 1: women and the poorest are hardest hit, and there are
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  Speaker 1: several underlying factors why used in Asia Pacific are particularly
• 14:58
  Speaker 1: vulnerable as and the Pacific region is home to the
• 15:01
  Speaker 1: majority of the world's young people aged fifteen to twenty four,
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  Speaker 1: and as such their contribution is is key to the
• 15:09
  Speaker 1: region's productivity and also inclusive development. Panic super Plan is
• 15:18
  Speaker 1: a twenty year old from Bangkok who wanted to turn
• 15:21
  Speaker 1: his love of aviation into a career by studying aerospace engineering.
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  Speaker 1: Those plans are now far from certain after COVID halted
• 15:29
  Speaker 1: much of global air travel. That the pandemic just like
• 15:33
  Speaker 1: change everything that I have thought about my career because
• 15:37
  Speaker 1: aviation was supposed to be one of those industry that
• 15:40
  Speaker 1: was going substantially before COVID, and I thought that Thailand
• 15:45
  Speaker 1: is kind of like the central hub of Asia, so
• 15:47
  Speaker 1: I figured it might be good if I pursued this
• 15:49
  Speaker 1: career path. While Panas is hopeful that the aviation sector
• 15:53
  Speaker 1: eventually gets back in the air, he's also looking at
• 15:56
  Speaker 1: his options if aviation was not possible. I have so
• 16:00
  Speaker 1: considered other fields of engineering, like the energy field, which
• 16:04
  Speaker 1: I already sent some applications to. So this is my
• 16:08
  Speaker 1: alternative plan right now. The impact goes beyond headline rates
• 16:12
  Speaker 1: of unemployment. Professor way John gene Young, founding director of
• 16:16
  Speaker 1: the Center for Family and Population Research at the National
• 16:20
  Speaker 1: University of Singapore, warned that this crisis will strain relations
• 16:23
  Speaker 1: with older generations. It puts young people's mental health at
• 16:27
  Speaker 1: risk and is shaping up to be worse than previous
• 16:29
  Speaker 1: jobs crisis. And it's not just use unemployment. There's the underemployment,
• 16:35
  Speaker 1: people who cannot find jobs, set up for something less
• 16:40
  Speaker 1: well paid and work fewer hours. There's also people who
• 16:45
  Speaker 1: get discouraged of looking for jobs that becomes I don't.
• 16:51
  Speaker 1: So there are various ways that this pandemic is making
• 16:55
  Speaker 1: the impact of economic recession much worse than young people. Uh,
• 17:02
  Speaker 1: you know, in a way that's much worse than any
• 17:04
  Speaker 1: other UH age groups. She highlights the impact on younger women,
• 17:10
  Speaker 1: especially who are forcing to unpaid labor at home as
• 17:13
  Speaker 1: they fall out of the workforce. You know, a woman,
• 17:16
  Speaker 1: this is particularly hard. Uh. Many of them would just
• 17:22
  Speaker 1: become um someone in the statistics that are not in employment,
• 17:28
  Speaker 1: education or training because of the labor market, but also
• 17:32
  Speaker 1: because of unpaid work demand at home. Even in China,
• 17:44
  Speaker 1: where the economic recovery is most advanced, the government has
• 17:47
  Speaker 1: warned that the jobless rate among young workers remains high.
• 17:51
  Speaker 1: In Japan, companies are cutting back on hiring and the
• 17:54
  Speaker 1: new graduates are losing their chance for long term employment.
• 17:58
  Speaker 1: Julia Re simply completed her internship at a big tech
• 18:02
  Speaker 1: company in Beijing, and there's now in Japan or she
• 18:05
  Speaker 1: plans to finish her post graduate studies. She's hoping for
• 18:09
  Speaker 1: a job in media or digital content at some of
• 18:12
  Speaker 1: Chinese technology joints, but she's already noticed that there are
• 18:16
  Speaker 1: fewer roles on offer. When she first graduated in two
• 18:20
  Speaker 1: thousand nineteen, jobs were plentiful compared with right now. I
• 18:25
  Speaker 1: think the competition is much fiercer than before because there
• 18:32
  Speaker 1: are so many graduates who should have fand a job
• 18:36
  Speaker 1: in twenty but didn't. Before the start of my job hunting,
• 18:40
  Speaker 1: I planned to apply for some potations in some internet companies.
• 18:47
  Speaker 1: UH this year, I found that this kind of job
• 18:51
  Speaker 1: not available anymore. The COVID nineteen shock is creating a
• 18:55
  Speaker 1: class of new poor across East Asia and the Pacific
• 18:59
  Speaker 1: Core into the World Bank, thirty eight million more people
• 19:03
  Speaker 1: will be living in poverty. In to counter long term scaring,
• 19:08
  Speaker 1: why didn't have at the isle O says, governments need
• 19:11
  Speaker 1: to pour money into education and skill training. The pathway
• 19:15
  Speaker 1: is that a lot of young people might have taken
• 19:17
  Speaker 1: when in Asia Pacific when they entered the labor market
• 19:21
  Speaker 1: that is now being disruptive was that used to be
• 19:23
  Speaker 1: insectors that are now most impacted, such as the wholesale
• 19:26
  Speaker 1: and retail trade and manufacturing. Governments need to adopt and
• 19:32
  Speaker 1: and implement immediate, large scale and and targeted measures to
• 19:35
  Speaker 1: stimulate economy and use employment. Essentially, that has to do
• 19:40
  Speaker 1: with the fact that it is now critical to prioritize
• 19:43
  Speaker 1: youth employment if if you want the region to come
• 19:46
  Speaker 1: out with more inclusive and sustainable growth. And the concern
• 19:52
  Speaker 1: we have this stage is that this will have long
• 19:55
  Speaker 1: lasting impacts and the current crisis on the labor market
• 19:58
  Speaker 1: outcomes of youth in the each And we know from
• 20:01
  Speaker 1: um the previous financial crisis in Asia and the Pacific
• 20:05
  Speaker 1: that they use unemployment rate never recovered to pre global
• 20:09
  Speaker 1: financial crisis level of of two thousand and and seven.
• 20:14
  Speaker 1: What is different now is the crisis due to COVID
• 20:18
  Speaker 1: nineteen is much more widespread on both the labor demand
• 20:21
  Speaker 1: and supply side. When I intervide young people for this podcast,
• 20:25
  Speaker 1: I was struked by their optimism that this crisis will
• 20:28
  Speaker 1: pass eventually. Money like planets per plan say that they
• 20:33
  Speaker 1: want to be ready to embrace whatever opportunities comes along.
• 20:36
  Speaker 1: It's a hopeful note in an uncertain time. The plan
• 20:40
  Speaker 1: for me is always learning final opportunities and never limit yourself.
• 20:44
  Speaker 1: Maybe the plan I thought about the energy like renewable
• 20:49
  Speaker 1: energy might not work for the next month, next year's whatever.
• 20:53
  Speaker 1: But I am always learning. I am always trying to
• 20:57
  Speaker 1: find new opportunities. If you can say that you can
• 21:01
  Speaker 1: do that, I think there's nothing to be scared off
• 21:05
  Speaker 1: for Bloomberg News. I'm and the current mm I mentioned
• 21:21
  Speaker 1: that our Eurozone economist may have a Kuza, who has
• 21:24
  Speaker 1: been on the podcast a few times, had contributed a
• 21:27
  Speaker 1: climate piece to this special New Economy Forum report. She
• 21:32
  Speaker 1: worked with the chief Emire economist Jamie Rush on this project.
• 21:36
  Speaker 1: But maybe tell me briefly what you did and some
• 21:38
  Speaker 1: of the broad brush conclusions. Yes. Thanks, So we've looked
• 21:43
  Speaker 1: at the cust of climate change, not just the physical
• 21:46
  Speaker 1: cost of climate change, but also the coust of transitioning
• 21:49
  Speaker 1: to a low carbon economy to a very those physical
• 21:52
  Speaker 1: cross from climate change, and so we've used so scenarios
• 21:55
  Speaker 1: developed the base the n JFS and network of Central
• 21:59
  Speaker 1: banks for being the financial sector, and we've focused on
• 22:02
  Speaker 1: three main scenarios. One is to do nothing scenario. It's
• 22:06
  Speaker 1: a hot planet scenario. It's a case where UM policies
• 22:10
  Speaker 1: simply continuous they are now no more and that would
• 22:13
  Speaker 1: mean in temperatureizing to about probably two degrees above pre
• 22:17
  Speaker 1: industrial times by twenty fifty and four degrees based with
• 22:22
  Speaker 1: than one and tread. And then there are two transition
• 22:25
  Speaker 1: scenarios along the lines of the Paris Agreements, so to
• 22:28
  Speaker 1: capt temperature at two degrees celsius um and that with
• 22:32
  Speaker 1: one olderly scenario that starts now and it's gradual and
• 22:35
  Speaker 1: it's times for the technology to mature, and when disorderly
• 22:39
  Speaker 1: scenario which is delayed until twenty thirty. And then we
• 22:44
  Speaker 1: looked at the different trajectories for different countries, which allowed
• 22:49
  Speaker 1: us to um estimate the costs for various countries rather
• 22:54
  Speaker 1: than just global. There's lots here and it's hard to
• 22:57
  Speaker 1: go into the into the details of the lots of
• 23:00
  Speaker 1: people knit picking at it. I did notice one big
• 23:03
  Speaker 1: thing which is obviously also quite worrying when you think
• 23:06
  Speaker 1: about the political economy of this is some of the
• 23:09
  Speaker 1: biggest economy is the ones that we look to now
• 23:12
  Speaker 1: and we know we're going to be really important for
• 23:14
  Speaker 1: this effort are ones that will not benefit from the
• 23:18
  Speaker 1: mitigation efforts for quite a long time. So you've got
• 23:21
  Speaker 1: them having to spend quite a lot of money or
• 23:23
  Speaker 1: at least sacrifice a certain amount of growth. For some
• 23:28
  Speaker 1: period before they get to see the benefits of that
• 23:31
  Speaker 1: of that cooler planet. Yes, that's right. I mean the
• 23:34
  Speaker 1: problem is that the cust of claim a change of
• 23:36
  Speaker 1: physical crist the conquest from hotter temperatures are are quite
• 23:41
  Speaker 1: slow moving and it's difficult to descend thing of them
• 23:44
  Speaker 1: to really notice them, and they become more and more important.
• 23:48
  Speaker 1: But according to these scenarios, they did already quest test
• 23:51
  Speaker 1: about one percent of GDPs of today, so even the
• 23:54
  Speaker 1: world was not so hot already, we would be maybe
• 23:57
  Speaker 1: a one percent how your GDP, and then by twenty
• 24:00
  Speaker 1: fifties estimate around three percent extract supercent extractors, so cost
• 24:05
  Speaker 1: of three percent in total and then ten percent by
• 24:07
  Speaker 1: twenty one dread. But these are central causes, are chronickers.
• 24:12
  Speaker 1: There are of course a lot of uncertainty. It could
• 24:14
  Speaker 1: be um in the In these estimates they go up
• 24:17
  Speaker 1: to maybe twenty five percent cost by to son and
• 24:19
  Speaker 1: one dread. So there's this big uncertainty on the cost
• 24:23
  Speaker 1: of claimate change and the fact that they are gradually
• 24:26
  Speaker 1: increasing and maybe they will building being point where they
• 24:29
  Speaker 1: start increasing even faster the cost of transition or or
• 24:34
  Speaker 1: more um front cloded. So a lot of the transition
• 24:37
  Speaker 1: costs would happen at the start of the transition. Even
• 24:40
  Speaker 1: in the orderly transition, they would be around two percent
• 24:43
  Speaker 1: by twenty fifty estimated, and then they would go up
• 24:46
  Speaker 1: to maybe three four percent by than one dread. So
• 24:49
  Speaker 1: they are very much frontlodied. And what happens is that
• 24:52
  Speaker 1: the focus being on the next thirty years, it looks
• 24:56
  Speaker 1: cheaper globally to do nothing than to start the position.
• 25:00
  Speaker 1: But of course an one hundred and so it means
• 25:03
  Speaker 1: that probably it quite given where it becomes more expensive,
• 25:09
  Speaker 1: more cheaper to do something than do nothing is around
• 25:12
  Speaker 1: to than D sixty nine, which is already quite late
• 25:15
  Speaker 1: in terms of global GDP two day. But then if
• 25:18
  Speaker 1: you if you look at the U S or the U,
• 25:20
  Speaker 1: it's more like to to than a ninety to extand
• 25:24
  Speaker 1: and one hundred um. So it's short for short stated policymakers,
• 25:28
  Speaker 1: and you don't have to be I mean even quite
• 25:30
  Speaker 1: long sighted. Once we're talking about seventy years ahead, and
• 25:34
  Speaker 1: that's that's a big challenge. If there was a central planner,
• 25:37
  Speaker 1: we would probably be uh. I think we would have
• 25:40
  Speaker 1: started quite a long time ago acty. But but in
• 25:44
  Speaker 1: those current circumstances, the coordination is a key challenge. But
• 25:48
  Speaker 1: to be clear, it's not saying that it would only
• 25:51
  Speaker 1: makes sense to do something in two seventy. It's just
• 25:54
  Speaker 1: that it won't be It won't be evident you will
• 25:57
  Speaker 1: be able to say right now that the costs are
• 26:00
  Speaker 1: less than the benefits until the final thing I noticed
• 26:04
  Speaker 1: in this research labor which I think would worry some
• 26:08
  Speaker 1: incoming members of the Biden administrations who have put the
• 26:11
  Speaker 1: climate high on their they've named it as one of
• 26:14
  Speaker 1: their four priorities, is that you you show that if
• 26:18
  Speaker 1: the more aggressive the US is in embracing the climate agenda,
• 26:23
  Speaker 1: the quicker it will be before China overtakes the US.
• 26:27
  Speaker 1: So it sounds like Donald Trump was right. So in
• 26:30
  Speaker 1: a way, that's high because the more discriptive costs of
• 26:33
  Speaker 1: climate change, or the discriptive class costs of a disorderly
• 26:36
  Speaker 1: transition will be fent more in some parts of the
• 26:38
  Speaker 1: world and less generally in advanced economies. Is there because
• 26:42
  Speaker 1: they are less reliant fuels, or they have better capacities
• 26:47
  Speaker 1: of adjusting um tailor as quite a lot of very
• 26:52
  Speaker 1: a lot of the productivities in very urban areas where
• 26:56
  Speaker 1: the cost of climate change from floods from very rain
• 27:00
  Speaker 1: in particular could be quite high, so that makes them
• 27:03
  Speaker 1: quite sensitive. As the estimates we have at the moment
• 27:06
  Speaker 1: is four percent course by twenty fifty for for for
• 27:09
  Speaker 1: chain now where it's less than I think it's probably
• 27:12
  Speaker 1: less than one percent for the US and most advant economies.
• 27:15
  Speaker 1: So that's right, that the genuinely emerging economies would benefit
• 27:21
  Speaker 1: more from from from from America's efforts from yeah, from
• 27:26
  Speaker 1: everybody's effort to to to move um to an orderly transition.
• 27:31
  Speaker 1: That's right. Well, much to think about, and let's hope
• 27:35
  Speaker 1: that the incoming Biden administration don't focus too much on
• 27:39
  Speaker 1: those long term scenarios. You get the impression that they're
• 27:42
  Speaker 1: trying to look they're looking past those kind of narrow assessments,
• 27:46
  Speaker 1: at least for now. Maybe because thank you very much,
• 27:49
  Speaker 1: thank you, thanks for listening to Stethonomics. We'll be back
• 27:58
  Speaker 1: next week with the bloom Burg New Economy Forum, where
• 28:02
  Speaker 1: I'll be discussing, among other things, the future of central
• 28:05
  Speaker 1: banking with a blockbuster panel of Larry Summer's, Janet Yellen
• 28:09
  Speaker 1: ragam Rajan and Lord Mervin King. In the meantime, remember
• 28:13
  Speaker 1: you can always find us on the Bloomberg Terminal, website,
• 28:15
  Speaker 1: app or wherever you get your podcasts. For more news
• 28:19
  Speaker 1: and analysis from Bloomberg Economics, follow as Economics on Twitter.
• 28:23
  Speaker 1: This episode was produced by Magnus Hendrickson, with special thanks
• 28:26
  Speaker 1: to Ender, current Mayor Kaza and tom Orlick. Lucy Meakin
• 28:31
  Speaker 1: is the executive producer of Stephanomics, and the head of
• 28:33
  Speaker 1: Bloomberg podcast is Francesco Levy.