The annual meeting of the World Bank and the International Monetary Fund (IMF) has been drowned out by the last week’s turbulent news cycle. All eyes have been focused on the devastation caused by Hurricane Michael, the disappearance of Saudi journalist Jamal Khashoggi, and the resignation of the US ambassador to the UN, Nikki Haley. Meanwhile, the great and good of high finance are gathering in Bali for the World Bank / IMF meeting. It matters beyond economics because it has ramifications for politics, diplomacy and the global social architecture — inequality at all levels, within societies and between countries. Last year, everything looked upbeat and optimistic. At the World Economic Forum (WEF) in January this year, experts were talking of a goldilocks scenario with synchronized growth in all regions of the world. Global gross domestic product (GDP) was forecast to grow by 3.9 percent in both 2018 and 2019. Nine months later, things look far less rosy. Synchronized growth has turned into a single-lane proposition led by the US. Indeed, the IMF started the meeting off by bringing down the growth forecast a notch to 3.7 percent for both years. This is still good, but there are more and more countries that will not be party to the positive developments. The World Bank / IMF meeting is populated by central bankers, commercial and investment bankers, and finance ministers. It is a major economics fest, but it is much more than that. The global economic outlook is tied to politics and diplomacy. What happens in the global economy informs whether countries are able to lift parts of their population from poverty into the middle class, or whether the latter disintegrates and constitutes the new poor. The salient examples are China’s ability to lift hundreds of millions out of poverty, and Venezuela’s economic mismanagement that has resulted in people no longer able to afford food, shelter and medicines for their families (inflation is set to reach 1 million percent by the end of the year in Venezuela). Many of them end up as refugees in neighboring Colombia en route to Peru, destabilizing the delicate social balance in those countries. International politics is the mood music behind the deteriorating global economic situation. US President Donald Trump’s zero-sum approach to trade nearly resulted in a breakup of the North American Free Trade Agreement (NAFTA). North American cooperation in the trade arena was saved at the 11th hour, and NAFTA was replaced by the US-Mexico-Canada Agreement (USMCA). All eyes at the annual meeting of the World Bank and the International Monetary Fund (IMF) have been focused on the devastation caused by Hurricane Michael, the disappearance of Saudi journalist Jamal Khashoggi, and the resignation of the US ambassador to the UN, Nikki Haley. Cornelia Meyer Not just industry but the world at large breathed a collective sigh of relief when the US started to play nice again with its neighbors. In the same vein, the US might come to an agreement with the EU on trade. China remains the lynchpin. As Trump ratchets up the rhetoric against it, President Xi Jinping and his colleagues refuse to join the party at the negotiating table. So far we have not seen any impact of the rhetoric on the real economy, but the trade talk has helped to dim the economic mood light. It is salient that the World Bank / IMF meeting takes places in Bali, because trade matters to Asia more than any other region in the world. It was the key driver behind eliminating inequalities within societies, and to a lesser degree among countries. China, Japan, Taiwan South Korea, and the Association of Southeast Asian Nations (ASEAN) have all built their economies, and with it their societies, on a global free-trade regime. The storm clouds are gathering in emerging markets, particularly in countries with large current-account deficits such as Argentina, Turkey, South Africa, Indonesia and Pakistan. We can argue that more than the economic wellbeing of those populations is at stake: If some of these economies are allowed to default, economic woes will quickly translate to rising inequality and might even destabilize whole societies (see Venezuela). In this context, the Europeans should worry about Turkey because it hosts 3.5 million Syrian refugees. This is a huge burden on its economy. So far, Turkish President Recep Tayyip Erdogan has prevented them from traveling westward. Should economic circumstances force him to open the floodgates, neither EU member states nor the institution would be equipped to cope. This brings us to the next crisis, whenever it will eventually unfold. In 2008, the world acted in tandem and the worst could be averted, but it left behind a legacy of increasing inequality that leaders have been unable to address so far. This time around, things will be more precarious for economic as well as political reasons. While banks may be better capitalized, interest rates are still in negative to low territory, and governments have taken on huge debt burdens through their quantitative-easing programs. This means that finance ministers and central bank governors lack the economic levers they had at their disposal last time around. Politically, things look a lot dicier. The world had far fewer strongmen as heads of state in 2008. Most of the leaders believed in the importance of the World Bank, the IMF, the World Trade Organization (WTO), NATO and other global organizations. Not so now. It would be far too easy to put the blame on Trump alone. There is Erdogan, President Rodrigo Duterte in the Philippines, Prime Minister Viktor Orban in Hungary, and soon maybe Jair Bolsonaro in Brazil. Even countries that are still led by more traditional presidents and prime ministers are seeing an increasing groundswell of support for populist parties. Germany, France, Denmark, the Netherlands and Italy are cases in point. War and inequality brought about mass migration across continents from countries in Asia, the Middle East, Latin America and Africa to their more affluent neighbors. This further empowers xenophobic, populist movements in the recipient countries. It is pivotal that economic risks and issues of inequality are addressed given the current state of world affairs. It is, therefore, a pity that the important deliberations at the World Bank / IMF meeting have been drowned out by other events. The meeting may not be very sexy, but at this stage it is probably the best venue affording countries an opportunity to collaborate in an increasingly adversarial world. Cornelia Meyer is a business consultant, macro-economist and energy expert. Twitter: @MeyerResources Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News" point-of-view