How the world economy learned to live with the drama
As economists predict a 'soft landing' after recent crises, is the global economy now 'oblivious to the new world disorder'?
It seems that geopolitical crises are 10 a penny in 2024, with concerns around the global financial system, an inflation crisis in the West, deflation in China and half the world's population heading to the polls.
There is "little wonder that analysts speak of 'polycrisis', 'hellscapes'; and a 'new world disorder'", said The Economist. "And yet, for the moment at least, the world economy is laughing in the face of these fears."
At the start of 2023, there was a "widespread fear that the global economy would endure a tough recession as a result of central banks responding to sharp rises in prices by raising interest rates from record lows", said The Times.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The reality has been very different, with global GDP growing by 3% in 2023 and the early signs are that it will continue this year and into next.
'Soft landing'
Just this week, Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), told the World Government Summit in Dubai that the global economy would emerge relatively unharmed from the inflation crisis and its accompanying rapid increases in interest rates.
This is the so-called "soft landing that politicians, economists and policymakers have been dreaming of", said The Times "fuelled mainly by a robust expansion in GDP in the United States".
While some countries around the world have struggled to recover from the economic setbacks brought on by the Covid pandemic – notably China, Germany, the UK and Brazil – the US has "emerged particularly strong", said the BBC's New York correspondent Erin Delmore. The US stock market is at record highs, and with an economy posting a 3.3% gain in the last quarter of 2023, a strong labour market and falling inflation, the world's biggest economy "has outpaced its counterparts in Europe and elsewhere".
It has achieved this, said Delmore, by pouring trillions into the economy, keeping unemployment low through its flexible jobs market, and maintaining its energy independence.
'Oblivious to the new world disorder'
There are, of course, plenty of things that could upend this new-found optimism, including developments in the war in Ukraine, attacks in the Red Sea, escalation in the Middle East, a slowdown in China, tensions over Taiwan, and the re-election of Donald Trump and subsequent collapse of Nato.
But for now, "the consensus forecast for the global economy remains cautiously optimistic", said Kenneth Rogoff, former chief economist at the IMF, in The Guardian.
The reason the global economy is "so oblivious to the new world disorder" is, said The Economist, partly due to the coordinated interest rate hikes by central banks, which have managed to bring down inflation from a peak of more than 10% across the rich world to around 6%. "This not only raises households' purchasing power; it also raises their spirits" said the newspaper, with consumer confidence in the world's richest nations rising sharply since an all-time low in 2022.
There is also "a more intriguing possibility", said The Economist, that "after so many shocking global developments, the world no longer minds chaos as much as it once did".
Yes there is a "widespread belief that the global economy is headed for a soft landing", concluded Rogoff, but "as the world confronts yet another turbulent year, policymakers and analysts need to bear in mind that a soft landing means little if the runway is in an earthquake zone".
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Elliott Goat is a freelance writer at The Week Digital. A winner of The Independent's Wyn Harness Award, he has been a journalist for over a decade with a focus on human rights, disinformation and elections. He is co-founder and director of Brussels-based investigative NGO Unhack Democracy, which works to support electoral integrity across Europe. A Winston Churchill Memorial Trust Fellow focusing on unions and the Future of Work, Elliott is a founding member of the RSA's Good Work Guild and a contributor to the International State Crime Initiative, an interdisciplinary forum for research, reportage and training on state violence and corruption.
-
'He adored Trump, and then rejected him'
Today's Newspapers A roundup of the headlines from the US front pages
By The Week Staff Published
-
The Thursday Murder Club: who's in the film and what we can expect
Speed Read Author Richard Osman reveals starry cast set to play his 'septuagenarian sleuths'
By Adrienne Wyper, The Week UK Published
-
The toilet roll tax: UK's strange VAT rules
The Explainer 'Mysterious' and 'absurd' tax brought in £168 billion to HMRC last year
By The Week UK Published
-
Reading glasses could be an economic boost to people in low-income countries
Under the Radar A recent study found that providing glasses can significantly raise a person's earning power
By Justin Klawans, The Week US Published
-
The wine industry is getting pressed as young people drink less
Under the Radar The once-dominating drink is not aging well
By Anya Jaremko-Greenwold, The Week US Published
-
Housing costs: the root of US economic malaise?
speed read Many voters are troubled by the housing affordability crisis
By Peter Weber, The Week US Published
-
Hydrogen cars are trying to be the next big sustainable vehicle
Under the Radar But questions remain as to whether they can overtake battery-powered electric cars
By Justin Klawans, The Week US Published
-
Disney is engaged in a proxy battle against activist investors
Under the Radar Members of the Disney family are backing the company's leadership in the fight
By Justin Klawans, The Week US Published
-
Chinese electric cars may be coming to spy on you
Talking Points The Biden administration investigates Chinese electric cars as a potential economic and national security threat
By Harold Maass, The Week US Published
-
Wendy's dynamic pricing change could upend the fast food industry
Under the Radar But the fast food chain will not be implementing the change in the typical manner
By Justin Klawans, The Week US Published
-
Immigration helped the US economy outpace peers
speed read The U.S. economy grew at an annualized rate of 3.2% last quarter
By Peter Weber, The Week US Published