Uncertain global economy

DR WARREN JESTIN, senior vice-president and chief economist at Scotia Economics of Scotiabank in Canada, says the global economy would be characterised by uncertainty over the next ten years.He made this point yesterday at the monthly luncheon of the Barbados Chamber of Commerce and Industry (BCCI), at Hilton Barbados where he was the featured speaker.Jestin said that businesses would relish security in access to credit, exchange rates and commodity prices, but “we are dealing in a world that almost certainly will be less certain over the next decade. We have changed financial markets fundamentally”.Following up on his presentation at a breakfast business forum at the same venue on Tuesday morning, he reiterated China’s powerful position in the world and that its growth spurt would influence the balance of global economics.“We have absolutely no idea where the government in China is going to invest its $2.4 trillion worth of foreign reserves over the next five years. Maybe they will leave them in treasury bills and bonds, maybe US [United States] interest rates will stay low, maybe they will invest in the energy sector. “They may decide to go into direct investments in many other areas, maybe in tourism, maybe in a variety of infrastructural projects all of which creates an uncertainty that is very uncomfortable,” he said.The economist said business leaders had to juxtaposition their search for economic certainties with the design of business models that could be adaptable to economic flux.“If anything has been learned over the last 24 months it is that change can be extraordinarily rapid and that we have to be able to adapt to those. The companies that cannot are the ones that may well fall by the wayside.“We believe that the demand that is coming out of many emerging economies which will be driving commodities the next three to five years will be strong enough to keep commodity prices high. . . . “I would love to be able to offer you certainty in the economic forecast. We are not able to see an environment that is clear. What we see is wide ranges of outcomes. And we have to be cognisant [and be] able to adjust within that range to alternative outcomes,” Jestin said.