Predicting the movements of the economy in recent times hasn't been easy. The past four years alone have brought enough volatility and transformations to fill an entire textbook on economics. From the COVID-19 pandemic, disruptions in supply chains from "producer to consumer," inflation, to loose and tight monetary policies, and much more, it has become challenging to forecast the path of the global economy.
From Bad to Worse:
The global economy entered 2023 in a turbulent state, driven by significant events that shook the world, particularly the Russian-Ukrainian war, which translated into higher prices for essential commodities like energy and food, along with a substantial increase in inflation rates. Central banks resorted to raising interest rates, resulting in a surge in debt levels and the collapse of global stock markets.
In this challenging environment, investors worldwide have little hope for improved economic conditions in the upcoming year, 2024. Current indicators tell us that there are numerous risks threatening the global economy. This is affirmed by a recent report published by Bloomberg, which highlights key factors leading to a "pessimistic outlook" regarding the global economy. Additionally, escalating tensions in the Middle East, including Israel's ongoing aggression against Gaza, their targeting of southern Lebanon, and US airstrikes in the Red Sea region, exacerbate the situation.
The aftermath of the Great Recession in 2023: What about 2024?
Amidst the escalating international conflicts, questions about the future of the global economy are currently swirling. The world is witnessing an intensifying struggle for existence instead of borders. Pervasive pessimism and uncertainty about the future prevail due to the concentration of wealth and social marginalization both among and within nations.
Many global economists affirm that the global economy in 2022 experienced challenging conditions resembling the period between 1929 and 1938, known as the Great Depression or the Great Economic Crisis that followed World War I and preceded World War II. This period directly affected major industrialized countries like the United States, Germany, and Britain, leading to a sharp decline in production, trade, and investments.
When the European economy bends under pressure:
With the increase in current global tensions, especially if the conflict shifts from the economic field to the military field between countries and major alliances armed with nuclear weapons, this may result in more catastrophic consequences than we expect. Starting from 2023, global events have witnessed a worsening day by day and hour by hour, and industrialized countries have begun to face fundamental economic problems like the rest of the world.
By reviewing the global economic map, we can observe a change in the contours of economic power that form the material basis for all other forms of power. As a result, these conditions require the necessity of changing some of the economic terms used, such as advanced and developing countries, northern and southern countries, value-added countries and rentier economies, socialist and capitalist countries.
To some extent, the term "geopolitical conflicts" currently dominates, and as an example of this, the European continent is no longer as it used to be, and the social protests in Britain, Germany, France, Italy, and others are a clear indication of their economic crises. This is due to the decline in the standard of living, consumer spending, purchasing power, economic growth rate, actual gross domestic product, supply chains, external cash flows, cash reserves, functioning of financial markets and stock exchanges, investments, liquidity rates, futures contracts, and others.
The role of economic theories in what is happening:
According to economic experts, each of these conflicting powers has its own economic measures based on its own approach and derived from old economic theories taught in economics colleges, such as "mercantilism, physiocracy, and classicism," Marxism, Keynesianism, and monetarism.
Experts believe that what is currently happening exceeds the boundaries of these theories, and with our belief that all possibilities are open to the future, the human mind will prevail and soon a light will appear at the end of the tunnel, and new economic visions capable of saving the world from a war that, if it happens, will destroy everything will emerge. Does this reality pave the way for "thinking outside the box" because every problem has its hidden solution, but if war occurs, we agree with the German physicist "Albert Einstein" when he said, "I do not know with what weapons World War III will be fought, but World War IV will be fought with sticks and stones."
Between the black swan and Ibn Khaldun's approach:
According to economic experts, the truth is not limited to our perceptions but may be beyond them, reminiscent of the theory of the "black swan," the essence of which is that most people believe that swans are white, and this belief continued until 1697 when the Dutch explorer "Willem de Vlamingh" discovered a black swan, thus invalidating the prevailing concept at that time and advocated by the Roman satirist "Juvenal" that the black swan is a term that refers to rare events. Therefore, after its discovery, it was confirmed that not seeing the black swan does not mean it does not exist. This applies to the ability to predict the future of the global economy, and the solution may lie in an existing theory but is unknown, like the "black swan," and it is embodied in the vision of the philosopher "Ibn Khaldun" by linking economic growth to urbanization.
According to Ibn Khaldun, urbanization leads to an increase in income, which in turn leads to an increase in spending, which represents demand for luxury goods, leading to their popularity and an increase in their production. This increases income, which turns into spending again, and the cycle repeats itself, thus saving the global economy. Does the black swan lie with the philosopher Ibn Khaldun?
