How to Manage the Top Five Global Economic Challenges
The world’s economic system has been through a lot in recent years — from the challenge of the financial crisis to income inequality, the pressures of immigration, changing technologies and geographic shifts in production, to name a few. In this opinion piece, Kalin Anev Janse, secretary general and a member of the management board of the European Stability Mechanism (the eurozone’s lender of last resort), considers five major challenges and why international organizations offer the best hope for managing them.
A year ago, we were shaken by geopolitical shifts with unpredictable ripple effects. The situation looks no more stable today. The Brexit vote and the U.S. presidential election outcome signal dramatic changes in cooperation globally and a push for more protectionism. In practice, these votes called into question the multilateral institutions and international collaboration among countries that embody that cooperation. In autumn 2017, we gathered together a group of senior officials from the 13 largest international organizations to try to crack these problems.
What happened?
Exactly 10 years ago, in 2007, the first signs of the Great Recession emerged. By 2008, the U.S.-led subprime crisis evolved into a global financial crisis. By 2010, Europe had become engulfed in its own crisis, throwing financial markets into turmoil and several sovereigns into a downward spiral of debt and banking crises.
Despite the current ongoing recovery, and the successful economic rebound both in North America and Europe, worrying trends became apparent in 2016. Some major players demonstrated a reduced commitment to multilateral cooperation, criticism of open and free trade, and fading interest in climate change. This new landscape increased uncertainty and poses a threat to more buoyant macroeconomic and financial fundamentals. It also puts a strain on relations between major players internationally, as well as between citizens domestically. In countries like the U.S. and the UK, it abruptly split societies in half and threatened a reverse of seven decades of international cooperation. Read more…