Protectionism is gaining ground and globalization is losing its attractiveness, Indian Prime Minister Narendra Modi told the World Economic Forum on Tuesday.
Modi is leading a big government and business delegation at the summit in Davos, Switzerland, the first Indian prime minister do so in 21 years, aiming to showcase India as a fast-growing economic power and a potential driver of global growth.
India’s economy is expected to more than double and touch $5 trillion by 2025, Modi said. The last time an Indian prime minister attended the Davos talks, India’s GDP was “little more than $400 billion and now two decades later it’s about six times that amount.”
He said his government was committed to boosting economic growth and reducing bureaucratic hurdles to doing business in India. Modi said his government was committed to making the economy attractive for investment.
U.S. tariffs on solar panel imports
However, he said the recent wave of trade protectionism, in which governments raise barriers to free trade between nations, is “worrisome.”
Snipers take up position on the roof of a hotel a day before the four-day World Economic Forum annual meeting opened in the Swiss Alps resort of Davos. (Denis Balibouse/Reuters)
Modi delivered the warning in a speech a day after U.S. President Donald Trump announced steep tariffs on imports of solar-energy components and large washing machines in a bid to help U.S. manufacturers.
A German business leader is warning Trump’s decision will backfire. Frank Appel, CEO of Deutsche Post DHL, told an audience at the World Economic Forum on Tuesday that the move will hurt exactly those whom Trump is ostensibly trying to help.
“Even if the U.S. does more protectionism, consumers will buy from different places and who pays the bill? All the employees in the U.S. finally,” Appel said.
During his 2016 election campaign, Trump blamed globalization for ravaging American manufacturing jobs as companies sought to reduce labour costs by relocating to Mexico and elsewhere.
Prime Minister Justin Trudeau, seen arriving in Zurich on Monday before heading to Davos, will address the World Economic Forum summit on Tuesday, looking to convince the world’s richest companies to invest in Canada. (Paul Chiasson/Canadian Press)
Tidjane Thiam, the CEO of Swiss bank Credit Suisse, said he remains bullish on global trade despite the tariffs decision.
“We will need to see how it impacts global trade, how other trading blocs react to that, but I remain optimistic,” Thiam said.
Modi said “forces of protectionism are raising their heads against globalization.” Without directly mentioning Trump or the U.S., he said “the solution to this worrisome situation against globalization is not isolation.”
The Indian leader said his government is committed to working to save the environment and alleviating the impact of climate change, through producing more renewable energy.
Modi added that the developed world needs to do more to help poorer countries adopt new technologies aimed at fighting the effects of climate change.
Global markets strong, but for how long?
Stock markets around the world are flying high amid a synchronized global upturn but a leading U.S. investor is warning of a potential “reckoning.”
Stephen Schwarzman, chairman and CEO of Blackstone, told the forum the markets have responded to a positive global economic growth story. It is, he said, a time of “enormous ebullience.”
However, he said there are “lurking” geopolitical risks out there that could put the knock markets off track and there will come a time when some of these problems are “not contained.”
U.S. stock markets have been in particularly strong, with the Dow Jones industrial average hitting a run of record highs on the back of confidence around the U.S. economy and Trump’s big tax reform package approved by the U.S. Congress last month.
