WE have a new year. Times readers, let alone Filipino policy makers, must keep abreast of what has happened to our world.
One of the major characteristics of our world in 2015, which actually became a solid fact of life in 2014, is that we now have a desynchronized world economic order.
This is a result of many factors. An initial driver of this change is the earlier upheaval that broke up the unipolar global order–in which the lone pole of power, influence and economic clout was the United States– into a multi-polar global order, with the United States losing its exclusive superiority (in some cases because the USA willed to share its power, influence and responsibility with other players). Other powers emerged such as China, the European Union, Germany, Russia, etc. as co-holders of world power.
The world’s stable economic system was also led to desynchronize by the 2008 financial global economic crisis. That crisis actually revealed that the old stability of the international economic order no longer rested on the solid foundations presumed to be provided by the great banks and financial institutions of America, Europe and Japan.
Because of the 2008 global economic crisis, Europe until now, six years later, is still floundering. Some countries of Europe are in recession. The EU is not expected to contribute much to global growth in 2015.
Germany, the richest and most stable of the European Union states, is now willing to allow the EU to shrink — by kicking Greece out and any other member that lacks Germanic discipline over their finances and their economies. Germany has been forced to take this hard stand because it risks being weakened by its role as savior of the EU’s economically and fiscally laggard members.
While the USA has fully recovered from the 2008 crisis and is in fact regaining its former fiscal and economic strength, the American people and its banks and financial institutions are not yet very eager to take global risks that might arrest their recovery. US growth is now in the old good 5 percent level.
China, which used to be the shining star in global growth, has declined. It has to attend to long-festering internal problems before it can once again attain the economic muscle that it had when it replaced Japan as the world’s second biggest economy after the United States.
The astute global-intelligence analyst, the head of STRATFOR, George Friedman, writes the following about “The Desynchronization of the Global Economy” as the third most important event in 2014:
“That the major economic centers of the world are completely out of synch with each other, not only statistically but also structurally, indicates that a major shift in how the world works may be underway.”
“The dire predictions for the US economy that were floated in the wake of the 2008 crisis have not materialized. There has been neither hyperinflation nor deflation. The economy did not collapse. Rather, it has slowly but systematically climbed out of its hole in terms of both growth and unemployment. The forecast that China would shortly overtake the United States as the world’s leading economy has been delayed at least. The forecast that Europe would demonstrate that the “Anglo-Saxon” economic model is inferior to Europe’s more statist and socially sensitive approach has been disproven. And the assumption that Japan’s dysfunction would lead to massive defaults also has not happened.”
“The desynchronization of the international system raises questions about what globalization means, and whether it has any meaning at all.”
What should we Filipinos do? Is the Aquino administration making the right decisions to equip our country to succeed in a desynchronized global economic order?