Next financial crisis to be worse than 2008: Horasis Chairman

The next financial crisis will be worse than the 2008 crash, said Dr Frank-Jürgen Richter, Horasis chairman and former director of the World Economic Forum.

He made the remarks April 23 addressing an audience of about 100 students and faculty at Schwarzman College, Tsinghua University.

Richter said the next crisis will be worse than 2008 due to nationalist- and populist-driven instability, an increasingly globalized economy, and a lack of dialogue and coordination in the international community.

Ritcher said the 2008 crisis was caused by the over-leveraging and packaging of financial products, but the next will be "a man-made crisis caused by major events like Brexit and the China-US trade war".

He further said that this coming crisis can be overcome with more dialogue and discussion among the world leaders.

"In the 2008 recession, China went relatively unscathed. That's no longer the case as the Chinese economy is highly integrated in the global economy. China is exposed to global headwinds," he said.

The China-US trade war has slowed global trade growth to around 4 per cent in 2018 from 5.25 per cent in 2017, according to the Interim Economic Outlook published last month by the OECD.

Referring to Brexit and China-US trade tensions, both of which have wrought significant damage on the global economy, Richter called for more dialogue and cooperation among multilateral organizations.

He suggested that countries can rethink and reform Bretton Woods, the agreement that created the World Bank and International Monetary Fund, and not abandon these institutions.

"The Chinese are designing their own institutions," Ricther said, citing the establishment of the Asian Infrastructure Investment Bank and the New Development Bank in Shanghai.

"We need to know how to align these with the current institutions and make China a part of the new Bretton Woods. We need more China, not less China."