The View | Falling global trade and rising debt point to grim outlook for 2024

The world must face the reality that China’s property sector is not the biggest economic threat and the chance of ‘soft landings’ elsewhere is just an illusion

Legacies of past monetary and fiscal excesses and present economic systemic fragmentation will undermine major economies

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Shoppers buy vegetables in Buenos Aires, Argentina, on December 11. The persistence of debt distress and high interest rates have left consumers and many developing countries in potential financial peril at the cusp of a global downturn. Photo: AP

Published: 5:30am, 17 Dec 2023Updated: 7:52am, 17 Dec 2023

Not collapsing, just crumbling. That would be a good way to describe the state of the global economy at present, and now that it has begun sliding, it probably won’t be long before it really hits the skids. Then, it’s downhill all the way.

That is not a happy prospect as we approach the new year. However, we need to face reality and accept that China’s property sector is by no means the biggest economic threat in 2024 and that the idea of “soft landings” elsewhere are an illusion. Legacies of past monetary and fiscal excesses and present economic systemic fragmentation will seriously undermine major economies, causing them to fracture or, in some cases, break.

The latest evidence of crumbling – which, as with discussions of melting glaciers and climate change, can signal a “tipping point” – is the forecast by a key United Nations body that global trade will contract by 5 per cent this year. Trade and economic growth go hand in hand, especially in export-dependent Asia. Meanwhile, World Bank data suggests that many developing economies are “on a path to crisis” because of high interest rates.

Why would the world tip into recession or slump in 2024 and beyond when it has proved resilient so far to Covid-19, supply chain problems, wars in Ukraine and Gaza, strained superpower relations, inflation and other shocks? Because that is how crumbling develops – incrementally at first, then with sudden acceleration. It is all about lagged impacts, especially on global monetary conditions and now trade. Economic growth will be next.

Many commentators do not appear able to grasp the fact that a headache does not go away when someone stops hitting you on the head with a hammer. The bruising remains, and internal injury takes time to show up.

Global trade has taken a beating from a wave of protectionist policies and restrictive regimes introduced in the name of national security or maintaining technological supremacy. However resilient trade structures might have appeared initially to such shocks, the impact was bound to show through as these restrictive measures multiplied, and that is precisely what is happening now.

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.css-1m2rp1p{color:#34b8b5;}The View | Falling global trade and rising debt point to grim outlook for 2024

The View | Falling global trade and rising debt point to grim outlook for 2024