Unprecedented threats to unprecedented growth

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World economy

The IMF released its World Economic Outlook in January 2018, where it expressed satisfaction with global economic growth in 2017, where the world economy expanded by 3.7%. Looking ahead, the Washington-based financial institution expects global growth to reach 3.9% in 2018 and 2019 – the highest such expansion since 2010. From an economic perspective, the results have been excellent.

When considering the global political situation, the picture is different. Global cohesiveness between countries is showing signs of deteriorating, which is cause for closer inspection. However, couple this with the internal political battles being fought within several Western countries (the US, UK, France, Italy and Germany are just some of the bigger examples), and the picture begins to lose its sheen – any ray of optimism on the geopolitical scene is all but snuffed out.

The rise of the right (the word populism has become overused) is an indication of a cyclical change in the political spectrum on both sides of the Atlantic, after many years of relatively centrist rule.

This phenomenon has shackled the British government’s ability to negotiate Brexit free of internally-imposed conditions.

It propelled Donald Trump to the highest office in the United States.

It brought Italian politics to a (more pronounced) standstill.

It has humbled the most powerful German Chancellor in decades.

It saw the victories of two domestically popular, but Brussels-bashing leaders to power in Poland and Hungary.

There are various reasons why the right has been on the rise, and these reasons have been well documented elsewhere.

It is worth remembering one thing for the moment: The rise of the right has come at a time in which global economic growth was improving, and despite improving conditions, their policies remain enticing for many citizens in their countries.

Just how much better might they do when the next global recession bites? How far off might the next economic recession be? A year, two? A few more than that? How will global economic and political cooperation survive a global economic downturn when its ability to cooperate is already dwindling – and at a time of economic prosperity?

With the advent of nationalism once again, political parties will be keener on putting up walls than tearing them down. Protecting their citizens’ jobs and livelihoods rather than open their markets to globalisation. The ability to coordinate on a global level may well have reached its nadir several years ago.

We are one global crisis away from testing just how far we have moved away from globalisation and global cooperation. What will come out of that… will look a lot different than what we have now. cropped-facebook-profile.png

Matthew BugejaThis insight has been written by Matthew Bugeja, a GeoPolitical consultant. Matthew Bugeja read for his Bachelor’s and Master’s degrees at the University of Malta. He has worked in both the private and public sectors in personal and public finance, whilst lecturing on a biennial basis at the University of Malta’s Department of International Relations as a Visiting Assistant Lecturer. He has had several publications in recent years, with several books published, along with interviews and op-eds featured on a number of media.

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