The gradual unraveling of the liberal international order

Despite the apparent resilience of the world economy on the surface, there are underlying vulnerabilities that suggest a more precarious situation. The global economy has been operating under an order that has been steadily deteriorating since the end of World War II, and is now on the brink of collapse. This breakdown of the existing economic order could lead to chaos, where power dictates outcomes and major powers may resort to war as a means of resolving disputes. Even without direct conflict, the impact of this breakdown on the economy could be severe and swift.

While America has managed to thrive despite escalating trade tensions with China, and Germany has endured the loss of Russian gas supplies without significant economic consequences, there are other potential threats looming. The Middle East, a volatile region, has not caused any major disruptions to the global flow of goods despite ongoing conflicts. However, a number of triggers, such as escalating geopolitical tensions or the breakdown of longstanding trade norms, could lead to a sharp deterioration in economic conditions.

Trade, which has rebounded from the pandemic and is expected to grow robustly this year as a percentage of global GDP, is just one aspect of the global economy that is showing signs of fragility. As countries grapple with increased uncertainty and the erosion of established economic norms, the potential for a more chaotic and unpredictable economic environment becomes increasingly likely. It is crucial for policymakers and leaders to address these underlying issues in order to prevent a more severe economic breakdown in the future.