♪♪ >> Hello and welcome to "GZERO World."

I'm Ian Bremmer, and today, we are looking at the state of the global economy in 2023, a new year, and we're putting it all into perspective.

Global inflation not going anywhere anytime soon as the likelihood of a worldwide recession looms large.

And yet, for most of us living here on Planet Earth, now is the best time to be alive.

Certainly better than the alternative.

Globalization has brought prosperity to billions worldwide.

And here in the United States, the economy has made it out of the pandemic remarkably well.

But will the combined threat of out of control inflation, an unstable China and a rogue Russia spell disaster for the world economy this year?

That's what I'm discussing with renowned global economist Dambisa Moyo.

And later, two words I guarantee you have not previously associated with the war in Ukraine -- dune buggies.

Don't worry, I've also got your "Puppet Regime."

>> My new year's resolution is to stop listening to all these clowns who say I shouldn't run in 2024.

>> But first a word from the folks who help us keep the lights on.

>> Major corporate funding provided by founding sponsor First Republic.

At First Republic, our clients come first.

Taking the time to listen helps us provide customized banking and wealth-management solutions.

More on our clients at firstrepublic.com.

Additional funding provided by... ...and by... >> Welcome to the global economy in 2023 and let's start with the good news.

You picked the right time to be alive.

The last two generations of humanity have experienced an unprecedented period of fast-expanding, broad-based prosperity.

The world economy tripled in size.

Almost every country grew significantly richer.

More than 1 billion people escaped extreme poverty to join the ranks of history's first global middle class.

There's a lot to look forward to in 2023, most of the world moving on from the COVID-19 pandemic, thank God.

Russia has no way to win in Ukraine, while the European Union and NATO are stronger than ever.

Climate economy is booming as renewable energy sources become dirt cheap.

And here in the United States, I would argue America's economic power is stronger coming out of the pandemic and through the Russia war than it was after the 2008 global financial crisis.

[ Confetti pops ] Now to the bad news.

The global inflation shock that began in the United States in 2021 and took hold worldwide last year is not going away in 2023.

Instead, it's become the principle driver of global recession, likely to stoke social discontent and political instability everywhere.

So how could the most robust global economy in human history -- remember all that good news?

-- get stuck in such a sticky inflation trap?

Well, first there was that pandemic, which prompted governments to cushion the fall in incomes with extraordinary fiscal and monetary stimulus.

Well, it also disrupted global supply chains.

Then just as the United States and Europe were coming out of the pandemic thanks to vaccines, China doubled down on its zero-COVID policy, locking down the global economy's most important manufacturing and shipping hubs.

And finally, Russia's invasion of Ukraine and the West's sanctions in response put a significant strain on the global supply of energy, food, and fertilizer.

As a result, the United Nations estimates that five years of human development progress have been lost since COVID hit.

And the impact has been global.

More than 90% of countries experienced a decline in overall human-development indicators in 2020 or 2021.

And in 2023, billions of people will become more vulnerable as more economic security and political gains are lost.

Women and girls will suffer the most, losing rights, opportunities and security as advances in gender equality are rolled back.

I'm not saying the bad news outweighs the century's worth of good news.

Not at all.

We still won the life lottery by being alive today.

But as the global economy lurches into this new year, there's plenty to be thankful for and plenty to fear.

How will it weather the highs and lows of 2023?

That is the subject of my interview today with renowned global economist Dambisa Moyo.

And here's our conversation.

Dambisa Moyo, very good to see you.

Thanks for joining.

>> My pleasure.

Delighted to be here.

>> So I want to start really big picture because we've had massive tumult in the geopolitical environment over the past months.

We've got a war in Europe.

We've got, you know, sort of whiplash on COVID policy in China.

We've got massive inflation.

Give me, for just a moment to start, your big-picture view of the global economy as we head into 2023.

>> Well, thank you, Ian.

Look, my global picture is for this year, 2023, we're going to continue to face a number of head winds, which clearly you've outlined, things like the Ukrainian war.

I don't think inflation is going anywhere.

And of course we have concerns, the sort of perennial concerns about slow and slowing economic growth around the world.

I would say structurally or long term, we have a bunch of head winds that we've been dealing with before the pandemic hit in earnest in 2020.

Things like technology and the jobless underclass, areas around massive growth in the world's population.

We're now over 8 billion people.

Issues around inequality, issues around supply as well as climate energy transition issues and debt.

And so there are ongoing challenges that we were already facing, but I think those things will be accelerated in 2023.

>> So you believe -- You're in the camp of global recession 2023?

You think we're going to be in that world?

>> Yes.

And look, frankly, Ian, I think a global recession is an acceleration of already structural problems around growth that really started before the pandemic.

So in that sense, the pandemic and the war inflation are really an acceleration of the structural slowdown and growth that I think many economists have been talking about before the pandemic hit in earnest.

>> So when you look at who is making structural and strategic investments to build out their own economic sectors, their own human capital, where do you think that's being done most effectively among the major economies, the G20 economies in the world right now?

>> Really, it continues to be, at least on paper, very much something that's led by China.

They have a very clear policy in terms of their innovation.

They recognize technology is going to dominate a lot of, not just networks and consumerism, but also public policy.

The disruption in public policy of education and healthcare is really going to be largely driven by technology.

And they're leaning into that very explicitly.

I mean, they're not shy about it.

China also is very much a leader in infrastructure.

Again, not news.

For several years now, they've talked about a systemic approach to rolling out infrastructure.

But more recently they've been very aggressively talking about their energy policy.

I mean, these are key areas where I would argue that the West, again generally, but specifically the United States, has not really had a clear articulation of what the plan is.

And perhaps more than that, dare I say, is that I feel we seem to be back-footed.

In some respects, the financial crisis was a surprise to us.

In some respects, the COVID pandemic was a surprise to us.

And not only did we not anticipate these things, but we didn't seem to have a plan that would at least be implemented off the shelf.

And so it's those type of things that are quite worrying.

Now, I'm not here to discount the West or the United States.

I think that the very nature of how democracy and market capitalism works means that there's an opportunity for a reset and to drive these things.

But I'm afraid that this moment, it seems there's a much clearer articulation of these necessary government industrial policies, as you call them, coming out of China and perhaps some other rogue states.

>> Now, the Americans today, in both response to COVID and response to China's technology policies, infrastructure policies, energy policy, first of all, it's very easy for Americans to say this is all China's fault and to build a strategic competition policy against them.

But there is a level of -- I want to use this word, everyone uses it -- decoupling, which is occurring.

And some of that is thoughtful and strategic.

Some of it is not.

Tell me what you think about the decoupling conversation in the global economy to the extent that it's being driven by the U.S., the extent that it's being driven by other countries.

Where do you come out?

>> Look, I think superficially, there's no doubt about it.

If you look at something like trade, for example, you think about the peak trade I believe is around 2006, 2007.

And since then we've seen sort of more regionalization, more balkanization around the world so that we can definitely pick out trends that would point to greater decoupling that's occurring.

I would argue, however, that that would be far too simplistic an understanding of the interplay and interlinkages, certainly between the United States and China.

I'm not dismissing the fact that there is a fever pitch in respect to competition in military technology and economic aspects, but I think it would be naive for us to not recognize that we are very strange bedfellows.

I think it's going to be much harder because we are linked in trade, et cetera.

But I do think the bigger story for me is this restructuring of the world order, that China is very much ahead of in some sense, not just with broader emerging markets, but also with our key strategic sometimes enemies.

>> China is the most important trading partner for almost all of the developing countries around the world.

That's true.

And that's a relatively recent phenomenon.

I wonder if you actually see a relatively, not necessarily smooth, but an accelerating path towards a China-led global bloc of developing countries, which seem to be what you were suggesting is coming.

>> And I do.

I suppose my lens is colored by the fact that I'm an economist.

And so people ultimately, across the emerging world where 90% of the world's population lives, are worried about continuing economic progress and improvements in livelihoods.

And at this point of the game -- and I'm shorthanding this -- I think there's a sense that they need a constructive story of investment and a story of growth.

And if you look at the IMF World Bank numbers for projected growth, they're still above 3% in China, as forecast.

And yeah, maybe they're down, but there's capital that's coming from China.

Yes, you're right.

It might be a bit more erratic.

But I think fundamentally, if you are looking for a growth story and if you're looking for investment, which many developing countries are, the China story is still quite attractive.

I'm afraid to say that because we did have a good number of decades where democracy and market capitalism were the story that the West was selling, and unfortunately we're on the other side of the mountain and we didn't deliver.

People like myself who are very pro-globalization and felt there were a lot of gains to be had, I think there were gains, but I think the narrative has been usurped by a sense that actually they were not shared and somehow globalization didn't work, which I disagree with, but I think that's the narrative that we're up against and that's why China has an upper hand.

>> Now, I want to spend a little bit of time on global energy.

Again, something that you spend a lot of time focusing on.

Maybe start with this incredible trip since we were talking about China of Xi Jinping to Saudi Arabia.

Certainly seems like the Chinese have a much better relationship in Riyadh than the United States does these days.

How do you think about the shift of power between global energy consumers and global energy producers?

Are they breaking up?

Are they fragmenting?

Where are the tectonics in the supply and demand equation globally?

>> So, Ian, can I just maybe separate your question into two parts?

Let me start by the global snapshot of what we're dealing with and then I'll talk to you more specifically about what I think are risks emanating from these shifts.

From a snapshot point of view, we are globally consuming about a hundred million barrels of oil every day, a hundred million.

That is an enormous amount to fill.

We've seen this, and this is why the energy price has been so volatile, but also extremely high.

But there's also a broader understanding that we need an energy transition.

I've never met anybody who disputes that, but maybe my friend group is narrow.

So there've been some massive shifts as we have signaled both in public policy but also in investment terms that people do not like the traditional energy sector.

>> Your point here is that we know that we need to transition to post-carbon.

There's been a massive amount of capital that's shifted out of traditional fossil fuels that is long term to be welcomed, but in the near term has led to significant underinvestment in the fossil fuels that we continue to need and demand every day around the world.

Is that my read of what you're saying?

>> You said it.

And most importantly that creates a risk for us living in the West because clearly now we hadn't anticipated that there'd be a war that would create these shocks and that put us slightly offside.

But as a practical matter, which is the second piece of this, China and Saudi Arabia, but others, GCC, Venezuela, Iran have been forming agreements.

Again very publicly so in which they are, I would argue, structurally changing the way the energy system works, at least making that a very concerted effort.

So investment, not just in sort of buying energy from Russia, which we've talked about.

I know you're very familiar with.

They're buying these energy sources at discount, but more than that, they are replacing, I would argue -- and this is a risk for the West -- they're replacing the refinement, a lot of the second-order aspects of the energy sector by investing in some of these other states.

We need to consume a hundred million barrels.

And unfortunately, the combination of Russia, Iran, and Venezuela is about 40% of the energy that's produced in the world.

And as we know, we're not exactly friends with any of them.

>> Venezuela is a tiny piece of that, right?

Because I mean, their economy has completely collapsed, so they can't really produce anymore.

>> True, but looking forward in terms of resource, Venezuela is a critical player in the future.

So we might not be buying from them, but there are other people -- the Chinas and other parts in the world who would have no problem buying from them.

>> One of the things that we've talked about is the fact that in Europe, the input costs are so much structurally higher than they are in the United States.

Right?

This is energy import.

It's not energy export.

And especially with what's been happening in the Russia war, implications of that are de-industrialization.

They're the ones that are really getting hit.

Not the Americans, not the Chinese, not the Gulf states.

It's actually Europe.

On the back end of Brexit, which is increasingly unpopular in the U.K., it feels like everything that could be going wrong for Europe and the U.K. economically sort of is right now.

Push me back.

>> It's a hard proposition to go against.

If you sit here and ask me what are the key areas that are going to dominate the future world, I would say things like energy transition, areas such as technology.

Again, not just networks and consumerism, but about disrupting public policy.

Things like public goods, like education and healthcare.

I mean, where is Europe in this story?

I mean, I think there are a lot of things that have traditionally been appealing.

They've got a rule of law.

They've got good language.

Good time zone.

But those things are not enough in a world where technology provides an impetus or a catalyst for reducing the costs of these things.

And so it seems to me that Europe needs more than just an industrial sort of Band-Aid solution, which again, because of the political infrastructure, it's always appealing to find short-term solutions.

Let's do more handouts.

Let's do more redistribution.

But that is not going to solve the structure problem and the need for economic growth over the long term.

There's lots of controls, lots of rules, lots of aspects that create that stranglehold, the bureaucracy, but actually that is not driving the innovation and investment that's going to be needed.

>> So, Dambisa, before we close, other side of that argument, tell me the one thing you think right now that the West is getting the most right.

>> Quite frankly, I think it is about some kind of unity among the Western countries, and I hesitate to say that because I worry at this moment that there still could be a peel off from Western countries.

I mean, clearly they've shown themselves through NATO, G7, sort of that resurgence that there is sort of a stalwart or a very committed view to the aspects of freedom and aspects of market capitalism or some form of capitalism.

My worry though is that as time passes and war continues and economic challenges are not addressed in a structural fundamental way and they continue to have these Band-Aid sort of half-hearted efforts, I worry that you start to see other countries peel off among the allied group.

I worry that those fissures could very quickly or schisms could widen very quickly if there's not real delivery or outcomes that people can point to in the near future.

>> Dambisa Moyo, thanks so much.

>> Thank you, Ian.

♪♪ >> To the war in Ukraine, where ingenuity of Ukrainian soldiers knows no bounds.

GZERO's Alex Kliment has the story.

♪♪ >> What do Steve McQueen, Mad Max, Delta Force and the Ukrainian army have in common?

Well, for all the high-tech weapons that Ukraine has gotten from the U.S. and Europe, one of the most effective battlefield surprises has been these, homemade dune buggies, outfitted for war.

Rugged, lightweight, and agile, the buggies are used to sniff out Russian positions, swarm Russian tank columns, and evacuate wounded troops.

Many of the buggies are made by this man, Volodymyr Sadyk, a metal worker from western Ukraine.

Before the war, his specialty was making gates, but in his spare time, he and his friends built dune buggies as a hobby.

When Russia invaded last February, Sadyk had an idea.

He offered some of the buggies to the Ukrainian army.

The feedback was immediate.

They wanted more.

The rugged bantamweight buggies are perfect for Ukraine's rolling terrain, which often gets too muddy for other support vehicles.

The first buggies, like Steve McQueen's famous Meyers Manx, were built in the early 1960s as no-frills thrill machines beloved by everyone from beach bums to Elvis.

But their agility and speed attracted military attention too.

Since the 1980s, the U.S. Army has used buggy-style attack vehicles of its own, deploying them in Kuwait, Iraq, and Afghanistan.

To date, Sadyk's company, VOLS, has built and delivered almost 60 buggies to the army.

Sadyk and his crew of seven men rely heavily on crowdfunding to source parts and materials and to pay his team's small salaries.

Sadyk says only a handful of his buggies have been destroyed in the war, but repairing damaged ones is part of the business as well.

Sadyk sells his buggies to the armed forces for between $6,000 and $10,000 a piece, depending on how they're kitted out.

He says he doesn't make much money on them, but profit isn't what he's after.

"For GZERO World," I'm Alex Kliment.

♪♪ >> And now to "Puppet Regime," where our felt little friends have some New Year's resolutions to share.

>> Well, now that 2022 is over, it's time to look ahead to 2023.

To start the year off right, we've assembled some world leaders to hear about their New Year's resolutions.

We begin with President Biden.

>> Oh, hey there, Jack.

>> For the last time, my name -- Whatever.

Mr. President, what is your New Year's resolution?

>> Well, it was a surprisingly good year for your old pal Joe.

The red wave was just a trickle and Trump is going to run again.

So my New Year's resolution is to stop listening to all these clowns who say I shouldn't run in 2024.

>> Mr. President, I think I speak for millions when I beg you -- beg you not to -- >> Sorry, can't hear you.

See you after my next colonoscopy.

>> [ Sighs ] Well, age before beauty, I suppose.

We now go to President Zelensky.

Mr. Zelensky, what is your resolution?

>> Well, we also had good year, all things considered.

I mean, we are still here, which nobody expected, and we are kicking Russian butt now, so I resolve to bulk up a little bit.

>> Bulk up?

But the world loves your endearing dad bod.

>> I am not talking about me.

I'm talking about map of Ukraine.

I will add a little bit of Softkranian underbelly.

[ Laughs ] >> Yikes.

Ambition versus contentment.

The eternal choice for New Year's resolutions.

Okay, let's go next to President Xi Jinping.

President Xi, you've been pretty busy lately.

What do you hope to take on in the next year?

>> Taiwan.

>> Can you elaborate?

>> No.

>> No?

>> No.

>> Okay, then.

Now, Mohammed bin Salman, what's on your mind?

>> Tough one.

What a year it was, punking Joe Biden, beating Argentina, getting immunity for that yada, yada yada back in 2018.

I don't know.

It feels like it's time to relax and focus on myself a bit.

Eat, pray five times a day and love, you know what I mean?

>> Ha, MBS, mind, body, soul.

I like it.

Okay, last but not least, it's Vladimir Putin.

>> In 2023, I will cut off all negativity that does not serve me in my journey.

I will thrive alone like beautiful Siberian cactus.

>> Well, there you have it, ladies and germs.

If we've learned one thing from the past 90 seconds, it's that powerful men really would rather destroy the world than just go to therapy.

Happy New Year.

>> "Puppet Regime"!

>> That's our show this week.

Come back next week.

And if you like what you see or even if you don't but are wondering what 2023, maybe even 2024 are going to bring you, that's right, check us out in advance, gzeromedia.com.

♪♪ ♪♪ ♪♪ ♪♪ >> Major corporate funding provided by founding sponsor First Republic.

At First Republic, our clients come first.

Taking the time to listen helps us provide customized banking and wealth-management solutions.

More on our clients at firstrepublic.com.

Additional funding provided by... ...and by...