The 2007-08 financial crisis wreaked havoc on the lives of millions of people across the globe, and upended the faith of many in the prevailing economic system, with many countries still recovering a decade on.

Drawing on extensive research in his new book, Narrative Economics: How Stories Go Viral and Drive Major Economic Events, Professor Shiller will draw on a rich array of historical examples and data and outline a new way to think about economic change, and the narratives that shape it, to provide answers to questions such as whether lessons have been learned since the last financial crisis, are the same dislocations likely to occur again and what toolkits, if any, are there for anticipating the next financial crisis or recession?

Attendance at this event is by invitation only.

The speaker will discuss development prospects in the Asia-Pacific and their implications for Europe and the UK. He will outline prospects for the region’s growth, the impact of the current US-China trade conflict as well as other challenges faced by the region. He will also discuss the future role of the Asian Development Bank and how it plans to support the further development of the region.

The Syrian currency depreciated by 11% between mid-August and the first week of September, to reach an unprecedented level of SYP692 to the US dollar. According to the government, the main reasons behind this collapse are the international sanctions imposed on Syria and currency speculation.

Accordingly, the government has forced speculators and local foreign exchange companies to sell the US dollar instead of holding it. Moreover, Syrian security agencies have pressured profiteers with close links to the regime to effectively participate in campaigns that support the local currency. Indeed, the Syrian pound appreciated in value in only a few days to reach an average of SYP615 for $1 in the second week of September.

This high volatility in currency prices results in monetary uncertainty among traders, and thus, increases the possibility of other depreciations in the near future.

Currency speculation could be the reason behind the high fluctuations. However, the fall in the exchange rate has been a continuous and steady trend ever since the beginning of the conflict. The Syrian currency is about 13 times less valuable than before conflict, and fell by 20% between January and September 2019. It is therefore more likely that the devaluation reflects a structural deterioration of the Syrian economy.

There are a number of interlinked reasons behind this trend:          

Economic collapse

The conflict in Syria has led to a drastic decline in economic activity. By 2018, the total accumulated economic loss was estimated at about $428 billion, which equaled 6 times Syria’s GDP in 2010. The country’s GDP lost about 65% of its value compared to its level before the war. The conflict has also caused a reallocation of resources to destructive and war-related activities. This drop in economic productivity weighs on the Syrian pound’s stability.       

Dramatic export decline

The total value of Syrian exports contracted from $12.2 billion in 2010 to less than $700 million in 2018, whereas imports declined from $19.7 billion to $4.4 billion during the same period. Thus, the coverage ratio of exports to imports dropped from 62% to 16% in this period, indicating that the government has become very dependent on external trade partners. Almost all import payments are made in foreign currencies, which increases the devaluation pressure on the Syrian pound.

Iran has provided the Syrian regime with credit lines estimated at about $6 billion to import oil and consumer goods from the Islamic Republic. These credit lines do not include all the Iranian financial support to the regime. Iranian oil exports to Syria are estimated at about 2 million barrels a month (a total of around $16 billion during the eight years of conflict). The increasing external debt to Iran, also due to military support, may contribute in stabilizing the Syrian pound for short period, yet it is bound to sustain the devaluation pressure in the long run.      

Damaging monetary policies

Since the beginning of the conflict, the Central Bank of Syria has issued a series of decisions that have contributed to the weakening of the Syrian pound. For instance, until 2015, the bank adopted a policy of selling hard currencies to local foreign exchange companies. This policy depleted their foreign currency reserves by about $1.2 billion, without halting the deterioration of the pound. The bank has also increased the money supply; there is three times the amount of currency in the local market as today compared to before the conflict, causing a surge in inflation and currency devaluation.

The absence of foreign direct investment

Between 2005 and 2010, Syria received an annual average of $1.5 billion as foreign direct investment (FDI); this amount has dropped almost to zero during the years of conflict. Russia and Iran have continued to invest in Syria, mainly in the mining sector, but the conditions of these investments have limited the inflows of foreign currency to Syria. FDI inflows were a major source of hard currency; their absence is an additional driver of currency depreciation.

International sanctions

Many countries have imposed sanctions on various sectors in Syria, including energy and financial transactions. During the last two years, the US has tightened its sanctions by introducing the Caesar law, which aims to isolate the Syrian regime. These sanctions have increased the cost of the Syrian imports and therefore raised demand for foreign currencies. Remittances, estimated at $4.5 million per day as well as foreign investments and exports were also negatively affected, and this has reduced the supply side of hard currencies inside Syria.

Currency speculation

The Syrian regime usually intervenes to manage currency speculation through government agencies and friendly business entities. But such speculations are very difficult to control in Syria given the poor economic conditions, the high level of business uncertainty and the lack of trust in institutions. This has driven the Syrian households, those who did not already lose their savings, to buy gold or hard currencies as safe investments.

The Syrian pound’s depreciation and its high fluctuations reflect the fragile political and economic situation in the country. The government’s improvised decisions have failed to stabilize it, causing a rise in the prices of basic goods. This has left more than 90% of Syria’s population under the poverty line. Long-term stability in exchange rates requires an inclusive and sustainable development strategy, one that would need to be based on an accountable and transparent political landscape. That seems a long way off.

At this event, which forms the second annual UK Trade Policy Observatory conference, there will be six presentations over the course of the day before concluding with a panel discussion and Q&A. This year’s conference will focus on the following legal areas of trade policy:

• Blockchain: Creating and Eliminating Trade in Services
• China's Role in the International Trading System
• Official Export Support: Compliance and Competition Concerns
• Strategic Litigation and Health Regulation: Implications for International Economic Law
• Development, Labour Standards and Sustainability in Trade Agreements
• Retaining Versus Reforming EU Food Safety Legislation: Selected Issues for a US-UK Trade Negotiation

To register for this event, please click here. 

This article argues that practices of global finance provide a rich opportunity to consider gender's embodiment in everyday, but highly regulatory, financial life. Tracing a pathway through the rise of the ‘diversity agenda’ in global finance in the wake of the global financial crisis, the article asks how ‘diversity’ has shaped the global financial services industry, and whether it has challenged the reproduction of gendered power in global finance. Recent, innovative feminist political economy work has laid out a clear challenge to researchers of the global political economy to explore how everyday practices have become significant sites of gendered, regulatory power, and this article takes up this challenge, analysing how the rise of ‘diversity’ in financial services reveals the crucial intersections of gendered power and everyday economic practices. Using a conceptual framework drawn explicitly from Marysia Zalewski's work, this article advances critical inquiry into how gender has become an often unacknowledged way of writing the world of global finance, in ongoing, and problematic, ways. It proposes that the practices and futures of the diversity agenda in global finance provide a window into the persistent failure of global finance to reconfigure its foundational masculinism, and asks that financial actors begin to take seriously the foundational, gendered myths on which global finance has been built.

Free trade agreements often transcend the transfer of goods and services to include chapters and clauses pertaining to social issues such as gender equality, racial equality, labour rights and climate change.

However, these chapters regularly lack suitable enforcing mechanisms and are seldom legally binding. In a recent report, Women’s Budget Group (WBG) called for gender considerations to be mainstreamed throughout trade agreements so that trade can best facilitate positive social change. Can a similar approach be applied to other issues of social concern?

This panel discusses how policymakers can balance international trade and economic growth with social and human rights responsibilities to reduce gender, racial and income inequality, strengthen labour rights and address the climate crisis. Is international trade inhibiting meaningful progress towards realizing national commitments to socioeconomic equality? What do commitments to progressive trade policies mean in practice?

And, in its present geopolitical position, how well is the UK placed to lead the way in establishing international best practice in the negotiation and formation of progressive trade agreements?

Global trade policy is not going back to the consensus that prevailed over the past few decades. Even if the growing cycle of tariffs and trade threats is tamed in 2020, the economic consensus that underpinned broad support for open trade is breaking down, and escalation in trade tensions is likely.

What next for the US and China?

The US and China are currently at the centre of these tensions. The equity and bond markets started 2020 off euphorically as news of a ‘phase one’ trade deal between the two dominated headlines. Such a deal involves the US reducing some previously imposed tariffs and tabling another round of threatened ones, while China agrees to buy more US goods, including agriculture. This represents a détente of sorts, but don’t expect it to last; trade between the two countries is not actually at the heart of their trade war.

The question instead is which country will have the biggest economy, based on excellence in industries such as artificial intelligence, machine learning and quantum computing. There is a national security component to this issue as well, given how much these high-tech industries feed into military and national security operations. This has increasingly become a concern for the United States as China has adopted a more aggressive regional stance, particularly in the South China Sea.

Tariffs have been used as a tool by both countries to try to prevent the other from dominating the global economy, and while they have dented both economies, they aren’t a particularly effective tool. In particular, tariffs do nothing to address US concerns about intellectual property rights in China, forced technology transfers and state subsidies for high tech industries. The phase one deal, therefore, is a superficial one that fails to get at the heart of the matter.

US–EU tensions

However, with a temporary US-China détente, the US may turn its attention to Europe. The EU and US are in the midst of negotiating a trade deal, but obstacles have been present from the start.

Last July, France adopted a 3% digital tax that applies to firms with global revenues over €750 million per annum generated from digital activities, of which €25 million are made in its territory. A US investigation determined that the digital tax discriminates against US companies such as Google, Amazon, Apple and Facebook, and so the US has threatened France with 100% tariffs on luxury exports, including wine.

The long-standing tensions between the US and EU over their aircraft manufacturing behemoths, Boeing and Airbus, make reaching a US–EU trade deal more complicated. They also risk undermining US–EU collaboration on some joint concerns regarding China’s trade policies and practices.

The United States recently threatened to increase its punitive measures against European goods as retaliation for Airbus subsidies. The World Trade Organization (WTO) gave the US the green light to impose tariffs of up to 100% on $7.5 billion of EU exports last October, but the US had limited them to 10% on aircraft and 25% on industrial and agricultural products. Now, the US is threatening to escalate.

Finally, the US has repeatedly threatened to impose tariffs on imported cars from the EU. This threat looms large for Germany in particular, which is a significant producer of automobiles and whose industry is still recovering from the diesel emissions scandal. Germany has for the past two decades been the powerhouse economy in the EU, but has more recently seen sclerotic growth.

US election implications

It is an election year in the United States, and while it is too early to call the election (or even guess who the Democratic candidate might be), the ballot could bring about change on trade. Protectionism has historically been more of a Democrat policy than a Republican one, so there won’t be a complete reversal of Trump’s trade policy if a Democrat were to win. But there might be some changes.

If a Democrat controlled the White House, the US would still want to pressure China, but it might adopt a more international approach in that effort. The US might also reverse the steel and aluminium tariffs that kicked off these heightened trade tensions.

Most importantly, the US might stop hindering the WTO by appointing judges to the appellate body (without which the WTO cannot address rulings that are being appealed) and would likely work with other countries to reform the WTO. The focus would shift from confrontation to negotiation. This, of course, depends on which Democrat is in the White House.

In the meantime, President Trump has a difficult balancing act. Being tough on China and bringing home American jobs were successful slogans in his first presidential bid. He will want to indicate he has delivered on both and will continue to do so. At the same time, tariffs have sparked dips in the markets that have caused the president to de-escalate trade tensions. As the 2020 election approaches, expect the administration to balance these two concerns.

Looking beyond the vote, there may be some changes to the US approach to trade over the next decade, depending on which party is in government. The most pernicious aspect of the trade tensions on the global economy has been the uncertainty they have caused; businesses have deferred and delayed investment as they wait to see what the new rules of the global order are. They know the old consensus on trade won’t come back, but don’t yet know what the new consensus is.

As long as the limbo persists, and it probably will for at least a few more years, trade issues will remain a risk for the global economy.

This article is the first in a series of publications and roundtable discussions, part of the Chatham House Global Trade Policy Forum.

Read all our analysis on the Coronavirus Response

The coronavirus outbreak comes at a difficult time for China’s ruling party. A tumultuous 2019 saw the country fighting an economic slowdown coupled with an increasingly hostile international environment. As authorities take assertive steps to contain the virus, the emergency has - at least temporarily - disrupted global trade and supply chains, depressed asset prices and forced multinational businesses to make consequential decisions with limited information. 

Against this backdrop, panellists reflect on the country’s nascent economic transition from 2020 onward. What has been China’s progress towards a sustainable innovation-led economy so far? To what extent is the ruling party addressing growing concerns over job losses, wealth inequality and a lack of social mobility? And how are foreign investors responding to these developments in China?

The outbreak of COVID-19 has demonstrated the wide-ranging and immediate impact a systemic shock can have on the global economy including the financial loss caused by the emergency shutdown of many retail operations, the loss of income for individuals who are forced to stay indoors and the major disruption to supply chains. The longer term impacts are still being realized and depend heavily on the ability of industry and the government to respond effectively to the direct economic shock caused by the pandemic.

Systemic shocks like the COVID-19 pandemic demand immediate responses, but should also encourage governments and industries to re-examine their recovery processes, their resilience and their forward planning. In this webinar, the panellists will discuss the short and long-term impacts of the current crisis and explore how industry can help ensure that the global economy is able to recover from, and build resilience to, future systemic shocks. How do business leaders move from making decisions to reimagining a ‘new normal’ and reforming their practices? What are the critical decisions that businesses should consider when planning for this 'new normal'? And how far can these decisions be based on expected changes to governmental or intergovernmental regulation of different sectors?   

This event is part of a fortnightly series of 'Business in Focus' webinars reflecting on the impact of COVID-19 on areas of particular professional interest for our corporate members and giving circles.

Not a corporate member? Find out more.