SINGAPORE (Aug 19): The past week may have marked the juncture when the many stresses in geo politics and the global economy reached a tipping point: It is now more likely that we will get a series of political shocks and an accelerated downturn in the world economy. Political hot spots — in Hong Kong, Italy, Brexit, Argentina and South Asia — are turning critical. New data suggests that the prospects for global economic growth have also taken a knock. Yes, the major central banks will now cut interest rates more aggressively, but monetary policy cannot alone overcome the headwinds. Therefore, the outlook for trade-dependent Asian economies cannot be good — unless their governments respond quickly and effectively.

What has changed — political flashpoints turning ugly

Anyone looking for good news in world politics is going to be disappointed. Tensions that have been simmering for some time could reach a critical point in several areas:

  • Hong Kong — a crackdown is likely:
    The signs of impending security actions to end the protests could not be clearer. The protesters’ aggressive tactics are provoking the Chinese authorities, who are appalled at the blockades that have crippled the Hong Kong airport and the proliferating instances of violence directed at police, which they have condemned as “sprouts of terrorism”. In her latest press conference, Hong Kong Chief Executive Carrie Lam made no concessions to the protesters but instead warned emotionally of a Hong Kong that risked being “smashed to pieces”. The official Chinese newspaper People’s Daily asserted that the “sword of the law to stop violence and restore order is overwhelmingly the most important and urgent task for Hong Kong”. Chinese media have shown images of armoured vehicles in motion and security forces engaging in exercises on the border of Hong Kong.

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