End of post-1945 economic order bodes ill for growth

Significance

The system of international institutions to promote cooperation and open trade was built on the political preferences of a group of the world's wealthiest states. Over time, the system adjusted to reflect changes in the distribution of wealth and political preferences. Latterly, while wealth and politics have continued to evolve, the order has not evolved -- it has atrophied.

Impacts

• WTO world trade rules will be a particular flashpoint; not only will world trade growth be weaker this decade, the rules will also atrophy.
• The finance sector will face greater default risks while developing countries will face higher costs in restructuring privately held debt.
• A reduction in migration would raise labour costs and limit major economies’ growth, while also reducing remittances to developing states.
• Currency volatility will weaken many nations’ export-led growth and raise debate on the US ‘exorbitant privilege’ of dollar global use.
• Insufficient global cooperation is weakening Western influence in the Global South and contributing to the scramble for scarce resources.