By
Aryagayathri R
Africa-Press – Mauritius. The crash of Wall Street in 1929 plunged the world into chaos; it had far exceeded being an American crisis and had become a global rupture. From Chicago to Berlin, factories shut down, currencies collapsed, and political extremism spread across countries and continents. Nearly a century later, another Great Depression is on the rise, tied to the fragility of the United States economy today. With the national debt climbing past $34 trillion USD, aggressive interest rate hikes are suppressing any potential investment, and rising geopolitical disputes are undermining trade networks; the American economic engine has started to look increasingly strained. Unlike a routine recession, a depression would bring about prolonged stagnation, mass unemployment, and the collapse of consumer demand and incite social unrest, and given the centrality of the US in global trade and finance, such a collapse would have consequences outside the American borders. Yet, the world of the 2020s is not the world of 1929, when the power center was largely dominated by a single entity; rather, alongside Washington, other power centers such as the European Union, the BRICS bloc, and regional actors in the Middle East, Africa, and Latin America have all developed their own buffers. If America falters, the fallout will still have repercussions across the globe, but its responses may be more diversified, even multipolar.
The American Core and Its Fragility
The US continues to remain the world’s largest economy with a GDP of $30.507 trillion USD, its dollar still the default reserve currency, and Wall Street the most influential financial hub, but this centrality also carries fragility. The sheer size of the US public debt has increased fears about fiscal sustainability. The Federal Reserve policies, particularly with its sharp interest rate hikes aimed at taming inflation, have slowed growth and raised choking consumer spending, drawing parallels to the deflationary traps of the 1930s. While unemployment rates have not matched a crisis level yet, wages for many Americans have stagnated, the cost of living continues to climb, and job insecurity is on the rise, and layered on top of these structural strains are geopolitical conflicts, from sanctions on Russia to trade disputes with China, which are shaking confidence in the US-led global economic order. If these vulnerabilities were to coincide, America could slip into a long downturn, one that would weaken its own society while rippling across the international system simultaneously.
The policy choices in recent years have in themselves added new pressure points. The popular ‘America First’ doctrine was launched initially to emphasize retreat from global commitments, but recent actions and approaches have doubled down on tariffs and industrial subsidies, designed to counter China and reshore and revamp key industries. These strategies may be appealing domestically, but simultaneously, they risk raising production costs, inflaming trade disputes, and destabilizing global supply chains. Meanwhile, the growing endorsement towards de-dollarization continues as countries expand the use of the euro, yuan, and other local currencies for trade and reserves, threatening to chip away at America’s greatest economic advantage—the ability to finance deficits cheaply through dollar dominance. If this trend accelerates, the United States would find itself forced to borrow at higher costs while facing weaker global demand, a combination that would magnify its debt crisis and expose the economy further to depression-level shocks.
Global Shockwaves
The aftereffects of a US depression would be immediate and widespread. As the world’s largest consumer in market contracts, nations heavily dependent on exports from Mexico to Southeast Asia would see a collapse in demand, and financial markets, still tightly tied to Wall Street, would face severe capital flight, triggering currency instability and sovereign debt crises in developing and vulnerable economies. Confidence in the dollar that has lasted for over a century and is considered to be unquestionable would further weaken as central banks diversify into euros, yuan, or even emerging digital currencies. The economic damage will also bring along its fair share of political risks, as the 1930s demonstrated that mass unemployment and despair often fuel nationalism and extremism, and in the fragility of today’s political climate, the risks would be sharper and more damning.
State-Led Chinese Buffer
The one country that is poised to weather such an economic crisis is China. During the 2008 global financial crisis, Beijing had launched a massive stimulus program that had insulated its economy and even sustained a global demand, and in 2025, China continues to benefit from its capacity for centralized decision-making, its diverse trade partnerships, and its ‘dual circulation’ strategy that puts greater emphasis on domestic consumption over international. Its campaign to push to internationalize the Yuan, particularly through the Belt and Road Initiative and energy agreements, also provides China with some insulation from the volatility of the dollar.
China does face its own vulnerabilities; the property sector crisis, its increasing demographic decline, and heavy state control over private enterprise raise doubts about its long-term resilience, but even so, its ability to act quickly and decisively means that it is better positioned than most economies to cushion the impact of a US-centered depression.
Europe & BRICS
The euro, its welfare systems, and the European Central Bank’s capacity for coordinated policy are its key strengths. Yet its heavy reliance on US demand, increasing political divisions, and energy insecurity weaken its reliance. Germany’s export sector would be hit hardest during the course of a potential depression, weakening its resilience, and without full cohesion, the European Union could face deep internal strain, even if it avoids outright collapse.
On the other hand, the BRICS bloc—Brazil, Russia, India, China, and South Africa—has emerged as a potential stabilizer. While it is diverse in structure, together they represent a massive share of global output; China anchors the group, India offers a rapidly growing domestic market, and Russia has pivoted its energy exports away from the West already, due to increasing Western aggression. Brazil and South Africa, though resource-dependent, would depend on intra-BRICS trade to soften the potential aftereffects of a depression. A US depression would most likely accelerate BRICS’ pursuit of alternative trade systems and dedollarization.
The Wider World and an Emerging Multipolar Order
The Middle East, mainly the Gulf states, has started to actively diversify beyond oil and has begun experimenting with non-dollar trade. Africa, despite being vulnerable to debt and export dependence, would benefit from rising investment ties with China and the European Union. Latin America, though, especially Mexico, would feel the pain and strain due to its proximity to the US, though Brazil’s BRICS ties may potentially provide a limited cushioning.
Unlike 1929, when America’s collapse dragged most of the world with it, today’s global economy has multiple centers of gravity. A US depression would still be catastrophic and would have far-reaching consequences, but the presence of alternative power hubs such as China, the EU, BRICS, and so on could absorb some of the impact, and the outcome most likely would not be a single integrated global crash but a more uneven, fragmented adjustment. However, the risk lies in political fragmentation, and instead of one system, the world could potentially splinter into competing blocs with distinct currencies, trade alignments, and rules, and that would mark not just the end of American economic hegemony but the beginning of a truly multipolar order.
The possibility of another Great Depression, once again centered around the United States, cannot be dismissed, and with the mounting debt, inflationary pressures, and political paralysis of the current US climate, serious vulnerabilities are exposed. A collapse would be felt across the world, but unlike in the 1930s, other centers and powers are better equipped to shield themselves in the event of one and even potentially step forward as stabilizers in cases like China. The crisis, if it occurs, would not only test and measure the world’s resilience but also accelerate an ongoing shift in the global political spectrum, from US centrality to an, albeit, more fractured, multipolar global economy.
How the US can avoid another depression
The United States is not completely helpless in the face of these rising risks. A mix of prudent fiscal reform, cooperative trade policy, and a renewed commitment to multilateralism is all that is required to avoid the repetition of another Great Depression. Washington could tackle and stabilize debt levels by targeting long-term spending efficiency while safeguarding critical welfare and infrastructure programs. Revitalizing global trade networks rather than undermining them with protectionist barriers would help preserve US competitiveness and restore confidence among allies. Maintaining the dollar’s centrality requires trust: The Federal Reserve and Treasury must assure its global partners that the United States will remain a stable and predictable steward of the world’s reserve currency. These measures will not only eliminate American vulnerability but also give the United States a fighting chance to contain the ripple effects long before they can spiral into systemic collapse.
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