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Dr Zhu Min on populism and "Trumpnomics"

At the World Built Environment Forum Summit in Shanghai, Dr Zhu Min, former Deputy Managing Director of the International Monetary Fund (IMF) and President of the National Institute of Financial Research at Tsinghua University highlighted the rise of populism and the ambiguities of “Trumpnomics” as important factors contributing to global economic uncertainty.  With the multilateral organisations facing populist criticism, Dr Zhu called for greater co-operation and responsible investment.

John Kraus, Director of External Affairs, RICS
13 September 2017

Speaking to over 700 international leading figures from across the built environment sector, Dr  Zhu issued a stark warning about levels of corporate debt in Asia. While corporates in the developed markets had been deleveraging, in emerging markets a combination of increased debt levels and low revenue generation raised the prospect of a financial crisis.

“The risks of a strong US dollar should not be underestimated.”

Low growth for the medium term

Dr Zhu pointed to a “permanent loss of 12% of GDP growth” globally since 2008. Nonetheless, global growth in the last three years had been stronger than expected. Dr Zhu described a “new normal” characterised by low growth, low inflation, low productivity, low oil prices and low interest rates. He cited IMF concerns about the global economy:

  • Weaker growth in the potential labour force in the developed economies, where the proportion of working age population had been steadily falling since its peak in 2008, in contrast to sub-Saharan Africa where the working age population would peak around 2050. This would lead to a population imbalance and increased migration.
  • Weaker growth in available investment funds and rising risk premiums, with a possible “dramatic global assets relocation”.
  • Sustained falls in labour productivity that failed to make up for the rising numbers of retirees.

Global inflection points

“We are at the beginning of a new economic era.”

Dr Zhu concluded that low growth appeared to be a structural phenomenon, and would continue for some time.

Dr Zhu acknowledged that overall risk was lower than in 2008 but added that policy makers had fewer options for dealing with market stress. A greater concentration of important risks such as negative inflation, negative interest rates and low trade was raising systemic risks in Asia. Asian economies were subject to additional stress, due to a combination of a strong dollar, rising interest rates, lower liquidity and volatile currency markets.

Alongside the economic picture, Dr Zhu stressed the challenge of rising populism and disparities in wealth distribution, both of which had reached levels comparable to the 1930s.

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