Resilience and structural reforms in the global economy

Date: 28 - 02 - 2024

Abu Dhabi

Source: Alittihad Newspaper

Mufakiru Alemarat

Dr. Ali Mohamed Al Khouri

The global economy is facing a critical phase characterized by the slowest half-decade of GDP growth in 30 years. This situation poses major challenges to policymakers around the world, as national policies will be forced to balance immediate economic stability with structural reforms that serve long-term goals.

The World Bank’s latest Global Economic Prospects report highlights the need for flexibility and structural reforms to deal with the current economic landscape. The global economy is expected to enter its third year of continuous slowdown, with estimates indicating a decline in the growth rate from 2.6 percent to 2.4 percent. This slowdown will be most pronounced in emerging economies, where growth is likely to be well below the average recorded in the past decade. Under these circumstances, rising geopolitical tensions and volatile financial conditions compound these challenges and represent additional complex factors that must be addressed.

National policy makers should focus on enhancing economic flexibility, as a way out of this maze. This entails diversifying economic bases, fortifying local industries, and implementing significant investments in human capital. Fostering entrepreneurship and strong support for small and medium-sized enterprises are pivotal, because they The two main drivers of innovation and creating new job opportunities.

Stimulating investment is another very important area. The slowdown in investment growth rates requires concerted efforts to attract foreign direct investment, especially in sectors that promise sustainable growth. The role of policymakers here lies in the task of creating conducive environments for investment, achieving a balance between economic and political stability, while providing a stimulating and attractive environment for investments in pivotal sectors.

Revitalizing international trade highlights a pivotal challenge for economies in light of indicators of global trade growth declining below historical averages. The strategic response to this downturn includes an approach that takes into account re-engineering business processes and activities to make them faster and more effective and reducing trade barriers by reconsidering customs tariffs and non-tariff barriers, with the aim of building a more open and competitive international trade environment. It is necessary to embrace digitization in business processes by integrating digital technologies to improve logistics services, increase the efficiency of supply chains, and facilitate better access to markets, especially for small and medium-sized companies. In addition, the development of e-commerce is imperative to adapt to developments in digital platforms and tools, to enable companies to benefit from global markets effectively, and to maintain their competitiveness.

Addressing the growing debt challenges, especially in developing countries, is an urgent issue. High interest rates have exacerbated these challenges as a worrying problem, given their significant impact on the financial and economic stability of these countries, which makes it necessary to work in cooperation with international financial institutions to In order to find sustainable solutions to debt.

Promoting sustainable development is another key area, and the urgent need to invest in green technologies and renewable energy cannot be overemphasized, as they are essential links to achieving climate goals and ensuring sustainable development. This requires a set of policies that stimulate clean energy investments and support the transition to a low-carbon economy.

In addition to the above, political stability, good governance, and social cohesion are vital factors that enable or hinder economic reforms. In areas that suffer from political unrest or societal unrest, for example, implementing economic reforms is much more difficult, and therefore we find that public confidence And his acceptance of economic policies are necessary for the success of these reforms, because policies that may be viewed as unfair, or disproportionately affect certain segments of the population, can lead to social unrest and political instability, which may lead to… Undermining economic and social reforms, and circulating efforts in vicious circles. Therefore, it is important for policy makers to take into account the social and political contexts in which economic policies are implemented, and to seek to develop comprehensive policies that take into account the needs and interests of all segments of society.

Finally, the power of global cooperation cannot be underestimated in these difficult times. Together, collaborative efforts in areas such as trade, climate change, and global health are essential for achieving a coordinated and effective response to the challenges posed by 2024.

The economic forecasts in global reports require a comprehensive approach based on the foundations of international cooperation to achieve a balance between immediate efforts to achieve economic stability and direct the compass of strategic reforms towards greater flexibility, sustainable growth and development.