We are in the toughest period the world economy has faced since the creation of the multilateral system more than three-quarters of a century ago. A quadruple shock of COVID, climate change, conflict and cost-of-living has undone years of hard-fought development gains.
Half a century after the 1970s’ stagflation, economies are slowing, even contracting, as prices rise again. Thus, the World Bank warns
, “Surging energy and food prices heighten the risk of a prolonged period of global stagflation reminiscent of the 1970s.”
In March, Reuters reported
, “With surging oil prices, concerns about the hawkishness of the Federal Reserve and fears of Russian aggression in Eastern Europe, the mood on Wall Street feels like a return to the 1970s”.
The world economy is on the brink of outright recession, according to the International Monetary Fund
(IMF). The Ukraine war and sanctions have scuttled recovery from the COVID-19 pandemic.
Colonial-style currency board arrangements
have enabled continuing imperialist exploitation
decades after the end of formal colonial rule. Such neo-colonial monetary systems persist despite modest reforms.
Darío is a locksmith in Flores, a traditional middle-class neighborhood in the Argentine capital, who will have to stop working in the next few days. "Suppliers have suspended the delivery of locks, due to a lack of merchandise or because of prices," he laments. His case is an illustration of an economy gone mad in a country that once again finds itself on the brink of the abyss.
The conflict in Ukraine has led to an increase in fertiliser prices in Uganda and neighbouring Kenya. Amidst the shortages, some farmers are shifting to a more sustainable way of enriching their soils using frass from the Black Soldier Fly.
Our world is in deep trouble – and so too are the Sustainable Development Goals (SDGs).
Time is running out. But there is still hope. Because we know what we need to do:
Lisa Argiropulos, a single mother of two teenage sons and a resident of Ottawa, Ontario, has been facing food insecurity since 2016, after an accident that left her with chronic pain and disabilities.
For 30 years, Tomasa Chávez visited the Central Market of Buenos Aires and rummaged through the tons of fruits and vegetables that the stallholders discarded, in search of food. Today she continues to do so, but there is a difference: since 2021 she has been one of the workers hired to recover food as part of a formal program launched by the Central Market.
After decades of rejecting international tax cooperation under multilateral auspices, rich countries have finally agreed. But, by insisting on their own terms, progressive corporate income tax remains distant.
Tax avoidance and evasion by transnational corporations (TNCs) are facilitated by ‘tax havens
’ – jurisdictions with very low ‘effective’ taxation rates. Intense competition among developing countries to attract foreign direct investment (FDI) makes things worse.
US-led sanctions are inadvertently undermining the dollar’s post-Second World War dominance. The growing number of countries threatened by US and allied actions is forcing victims and potential targets to respond pro-actively.
SWIFT strengthened dollar
The instant messaging system of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) informs users, both payers and payees, of payments made. Thus, it enables the smooth and rapid transfer of funds across borders.
Food crises, economic stagnation and price increases are worsening unevenly, almost everywhere, following the Ukraine war. Sanctions against Russia have especially hurt those relying on wheat and fertilizer imports.
Unilateral sanctions illegal
Unilateral sanctions – not approved by the UN Security Council – are illegal under international law. Besides contravening the UN Charter, unilateral sanctions inflict much human loss. Countless civilians – many far from target countries – are at risk, depriving them of much, even life itself.
Developing countries are facing a combination of crises that are unprecedented in recent times. Over the last three years they have had to face the COVID-19 crisis, the food crisis, the energy crisis, the climate change crisis, the debt crisis and, on top of all this, a global recession. The crises have overlapped, and each has added to the problems created by the previous ones.
Developing countries – in Africa, in Asia, in Latin America and in the Middle East - are facing a combination of crises that are unprecedented in recent times. Over the last three years they have had to face the COVID-19 crisis, the food crisis, the energy crisis, the climate change crisis, the debt crisis and, on top of all this, a global recession. The crises have overlapped, and each has added to the problems created by the previous ones.
US and allied economic sanctions against Russia for its illegal invasion of Ukraine have not achieved their declared objectives. Instead, they are worsening economic stagnation and inflation worldwide. Worse, they are exacerbating hunger, especially in Africa.
At this year’s World Economic Forum (WEF) at Davos which ended last week, the attention of the world’s financial and economic elite was captured by the war in Ukraine whose president Volodimir Zelensky used his address to call to “complete withdrawal of foreign businesses from the Russian market”, despite 380 of the largest multinational companies still operating in Russia
Two decades ago, Trynos Mahamba left Zimbabwe for the United Kingdom, but back home, he has changed the lives of his relatives.
Since the day after he left, Mahamba (53) has been sending money home while Zimbabwe’s economy faltered amidst violent land seizures from commercial white farmers during Zimbabwe’s land reform programme.
A class war is being waged in the name of fighting inflation. All too many central bankers are raising interest rates at the expense of working people’s families, supposedly to check price increases.
In the midst of what has been an incredibly turbulent period for Lebanon, the conclusion of elections last week ought to be hailed as a chance to focus on the future. This, the first election since the mass uprisings in 2019 against what was seen as a corrupt ruling elite, has shown some signs of the drive for change.
Central bank policies have often worsened economic crises instead of resolving them. By raising interest rates in response to inflation, they often exacerbate, rather than mitigate business cycles and inflation.
The world is being pressed by financial interests to raise interest rates, ostensibly to check inflation. After the US Federal Reserve started raising interest rates, more central banks have been doing likewise.
Considering inflation’s contemporary causes, such ‘follow the leader’ central bank mimicry cannot check it except by slowing economies. Worse, this has meant taking on huge new risks, seriously damaging world economic prospects in the medium and long-term.