The Global Economy Between the Pandemic and the War

This chapter analyses a troubled world which is needing a radical mental shift at global level. The chapter studies the way in which the global economy has been hit by several shocks, most notably the Covid-19 pandemic and the war. This has generated great uncertainty about economic prospects, given that most of the factors at play are not economic in nature. After a sharp contraction in 2020, the first year of the pandemic, the economy rebounded in 2021, followed by more moderate growth in the following years. The US economy has proved resilient, but some parts of the world, including Europe, are flirting with recession. China has slowed down considerably. The shocks have also impacted inflation, putting an end to the paradigm of the last few decades, of low inflation and low, or negative, interest rates. Policymakers have had to react to the new circumstances. Another area severely affected by recent events has been international trade, historically an engine of world growth. The mechanisms and fora for international cooperations that helped bring about the solution of past crises do not seem to effectively work this time. Simultaneously with these shocks, the global economy is being confronted with increasing urgency by some long-term challenges, starting with climate change and the energy transition, but also including the effects of new technologies, especially artificial intelligence, on the labor market, and the aging of the population.