THE THIRD largest economy in the world, Germany, has declined 3.3% in the past three months, which is to say that it’s officially in recession.
The United Kingdom is in recession. Japan is in the same recessionary situation. China, too, is in a recession despite their claims to the contrary.
The United States has not yet reached recessionary status, but finance people I work with say that it is getting there. The other countries got there ahead, but it looks like the world is going to enter another recession in 2024.
The only question when it does enter recession, will it be a soft landing or a hard one?
A recession in 2024 will take place in a tumultuous political context: Wars in Ukraine and Palestine, Threats of war in Africa and Asia, Privateering in the Red Sea and many others. Will a recession exacerbate these issues or will it be a non-factor? It’s hard to say.
On the one hand, a recession is an economic problem not a political one. If there will be more political problems in 2024, their correlation with the recession may largely be coincidental. Consider for a moment Russia’s invasion. That happened shortly after the Covid lockdowns ended, a period when economic outlook was positive.
On the other hand, a recession may have deleterious effects on the domestic politics of many countries, and that will have an indirect effect on the world stage. The “Great Recession,” for example, led to the creation of Occupy Wall Street, and although it had eventually fizzled out, it had caused quite a stir when it was still around.
The same can also be said about the Arab Spring and how it changed the political landscape in the Middle East. So it’s possible that economic problems this year can end up escalating political problems further down the line.
Either way, it’s important to be prepared, not only financially but also psychologically for what’s coming./PN
