Interview: Multilateralism, complementarity essential in tackling economic woes, says Argentine economist

Today’s global economic hardships and the fraught international situation require a greater commitment to multilateralism and complementarity to overcome and mitigate greater risks in the future, Argentine economist Jorge Marchini has said.

In a recent interview with Xinhua, Marchini, vice president of the Foundation for Latin American Integration (FILA), said the volatile global situation is reflected in the sharp rise of raw materials (commodities) price, which, along with global interest rate hikes and changes in global value chains, spell uncertainties about the future.

In the wake of the COVID-19 pandemic and amid geopolitical conflicts, the global economic outlook appears bleak. But if these issues can be overcome, there is likely to be a kind of growth spurt that has been lacking until now, he said.

“We have to look for mechanisms at the international level given this type of reorientation of the global economy,” he said.

In the global economy, one of “the factors with the most impact is the price of products, (or) the issue of inflation,” said Marchini.

The uncertainty around prices invariably “puts the focus of attention on two elements: energy, such as oil, and food,” both of which can “greatly affect societies’ standard of living,” he added.

At the same time, steps to spur the global economy may “not be as effective as expected” due to inflation-fighting measures in different countries that have restricted the flow of capital, he said.

In Latin America, the economic recession comes atop heavy debt burdens, some of which were derived from COVID-19, coupled with countries’ imbalances in the balance of payments, said Marchini, also professor of Economics at the University of Buenos Aires.

These factors can impact currencies, with “changes in currency prices also generating uncertainty,” he said.

To all these factors you can also add the changes seen in the global value chains. The “most significant structure” of trade achieved worldwide in recent years is undergoing profound changes due to protectionist measures stemming from geopolitical strife, the professor said.

Protectionist practices must give way to greater complementarity, and in that regard, China is working on new ways to strengthen cooperation, said the economist, noting the Asian country has been helping Latin America with greater trade flows and financial investment in key infrastructure projects that contribute to development.

In the coming years, the economic situation could become worse if there is no commitment to resolving tensions, to multilateralism and to the concept of complementarity instead of dispute, he said.

“The gap between … better-positioned countries and disadvantaged countries has deepened, and that somehow threatens the conditions of a basic social contract that society needs,” warned the economist.

“There is a certain danger at this time that relations between countries become more unbalanced … I believe that multilateral organizations must be activated,” he said. ■

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