Africa-Press – Mauritius. In mid-2019, I wrote a couple of papers published in various newspapers highlighting the fact that this new decade will be one of great turbulences and uncertainties underpinned by increasing geopolitical tensions (West vs East, North vs South) and the end of a chapter of globalisation the way we’ve experienced it over the last 50 years. The signs were all out there well before we moved into this new decade. The global financial crisis in 2007/08 was a precursor of more to come in this decade.
Are we headed for a new global recession? Economists are warning the next downturn is looming. Pic – Euronews
A rising China/India, a declining Europe, a USA struggling to keep its number 1 position in the world, a unipolar to multipolar world, an ageing population in the Western world, a youthful population in Africa/South East Asia, the advent of AI and robotisation, democracy under pressure with the rise of populism and fascism in the most democratic countries, reshoring/onshoring, increasing protectionism, deglobalisation or rather globalisation version 2.0, increasing inequality in major pro-capitalist economies, the beginning of the fight for space economy/space territory, etc. All these are coming to play at the same time. Never over the last 50 years did we have to deal with so many issues in one go.
The big difference today vs 50 years ago, the same interconnected world we have been building under globalisation labelled as the global village, is the same architecture that’s causing us to bear global economic tremors at the same time. Whatever major event that occurs from one side of the planet, has a repercussion with the rest of the planet no matter where one might be based. Prime example is the Ukraine/Russia crisis, where bottom line is we are all facing the brunt of what’s happening in Eastern Europe.
After nearly two and a half years of the Covid-19 pandemic, where unprecedented amount of new money has been printed by nearly all central banks and injected in their domestic economies, the world is being faced with rising inflation and a number of countries including Mauritius with stagflation. The magnitude of new money printed by the USA, UK, and EU combined total nearly US$15 Trillion over 18 months, a whopping 17% of the world GDP! And then we are surprised as to why inflation was already creating havoc even well before the Ukraine/Russia crisis.
This stagflationary period will remain with us for quite some time unless we hit a proper recession that would collapse global prices of commodities and products and services. As we are getting close to the fourth quarter of 2022, a recession in major economies around the world is not an if, but rather a when. The reality is most developed countries are already in the pre-recession period. The USA, as an example, is already in recession following two quarters of negative GDP growth. The same for Germany which is the manufacturing hub and powerhouse of Europe with zero GDP growth. Let’s face it: despite massive quantitative easing (QE) and money printing, the developed countries are stalling.