Global Economy Seeks New Framework

(MENAFN) The previous framework governing the global economy, namely “the Washington consensus is behind us,” is no longer sufficient, as geopolitical and security considerations have introduced a fresh dimension. The global economy is now searching for a new structure to operate within, according to S&P Global Ratings’ global chief economist, who shared his insights with a news agency.

Paul Gruenwald, speaking on the sidelines of the 56th annual World Economic Forum (WEF) in Davos, Switzerland, noted that issues such as “trust in the system, trust in the major countries, and companies” are among the most discussed topics at this year’s WEF. Nations and corporations are attempting to adjust to evolving supply chains, trade corridors, and financial transformations.

“I think the old system, which was based on the idea that markets are good, free trade is good, free flow of capital is good, (a) kind of a borderless world (…) Now we have a lot of security and geopolitical concerns that are overriding trade,” Gruenwald explained.

He added, “We're trying to find a new order, but I think navigating those risks, building in redundancies, being more opportunistic in who we’re partnering with, hedging our exposures—those are some of the big things. (…) The old order was kind of underwritten by the US as the benevolent hegemon, and I think that role is evolving.”

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