MacroscopeWith the global economy in danger of crashing, the world needs better leadership

While central bankers’ aggressive interest rates are not helping global economic stability, reckless political leaders are further endangering the situation

Geostrategic actions that hurt global trade are hardly what the world economy needs. Will things change for the better after the 2024 US election?

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Chinese President Xi Jinping meets his US counterpart Joe Biden on the sidelines of the G20 summit in Nusa Dua, Bali, on November 14, 2022. Western nations that seek to decouple from China are setting the global economy on a path to disaster. Photo: AFP

Published: 3:30am, 2 Jul 2023

What was once just a possibility, then a likelihood, that the global economy would suffer a hard landing, has now become a virtual certainty. It is a grim inevitability, and the same goes for a looming debacle in leading stock markets.

How could it be otherwise in a world that is at war with itself as much as with a common enemy, where rival camps are battling with each other and where there is no common agenda for tackling myriad problems?

It is as if a suicidal pilot has locked himself in an aircraft cabin before initiating a fatal dive and no one else can gain access to the controls, even assuming they have the competence to avert a disastrous plunge to earth.

The figurative pilot in this case is a number of people – political leaders who put personal and national agendas ahead of the global good, central bankers who elevate fighting inflation above economic stability and others who cannot or will not see that the global economy is stalling.

What happens after the hard landing or crash? There are no emergency services on hand to lend aid and minimise damage. Monetary firefighters are too busy dousing inflation while fiscal rescuers have already shot their bolt.

Political leaders, meanwhile, appear deaf to the cries of the economy. In the US, President Joe Biden is pushing towards confrontation with Russia and China. In Russia itself, President Vladimir Putin is indulging in brinkmanship.