Successive Crises Reshape the Global Economy

The recent war, along with the rapid international developments and wide-ranging geopolitical and economic repercussions that accompanied it, has shown that the global economy has entered a new phase that experts call the "economy of crises," in which successive crises have become a defining feature of the global economic system. This comes after a long period during which economic globalisation flourished, built on the cross-border flow of goods, capital, and production and supply chains, which characterised the era stretching from the early 1990s to the late 2010s.

The contours of this shift began to emerge with the 2008 global financial crisis, which exposed the fragility of the global economic system and led to a slowdown in international trade growth. This was followed in 2020 by the "Covid-19" pandemic, exacerbating existing imbalances after causing unprecedented disruption to production and supply chains. Global economies had barely recovered from the fallout of the pandemic when the Russia-Ukraine war broke out, triggering a severe energy crisis in Europe and a global food crisis, followed by economic and financial shocks in rapid succession.

In parallel with these developments, inflation emerged as one of the most prominent challenges facing the global economy. Global inflation rose to around 8.7% in 2022, the highest level recorded in nearly four decades, driven by rising energy and food prices, supply chain disruptions, and increasing transport and production costs. This prompted central banks to adopt tight monetary policies, with the US Federal Reserve raising interest rates from near-zero levels in early 2022 to more than 5% in less than eighteen months, in one of the fastest monetary tightening cycles in its modern history.

Although these measures helped curb inflationary pressures and avert a severe global recession, they raised the cost of servicing public debt and increased pressures on governments, businesses and individuals. This coincided with global indebtedness reaching record levels, as total global public debt exceeded $324 trillion in early 2025, equivalent to around 325% of global gross domestic product, increasing the vulnerability of emerging economies and low-income countries and curtailing their capacity to finance development projects and investment.

The policies of US President Donald Trump played a prominent role in accelerating this shift, by adopting an economic approach based on trade protectionism, imposing tariffs, renegotiating trade agreements, and encouraging the reshoring of industries within the United States. With escalating trade tensions, particularly between the United States and China, followed by worsening regional conflicts, wars and economic sanctions, globalisation began to lose some of the momentum it had enjoyed for decades.

This led to a redrawing of global trade and international investment maps, and to a reassessment of the concept of interdependence among nations, as considerations of national security, economic sovereignty, and securing strategic commodities frequently came to take precedence over cost reduction and economic efficiency. Geopolitical shifts in recent years have thus imposed a new economic reality that has reshaped the rules of international trade and investment.

The Recent War and the Reshaping of the Global Economy

The US-Israeli war on Iran, meanwhile, has reshaped the global economy not only through its direct military effects, but also by deepening the crises sweeping the international economic system. This war exposed the extent to which the global economy is tied to geopolitical risks, demonstrating that any military confrontation in the Gulf region or other strategic areas of the world is capable of generating repercussions that extend beyond regional borders to hit energy, trade and financial markets worldwide.

This war also brought concerns over global energy security back to the forefront, particularly the crisis of the 1970s, given Iran's strategic position overlooking the Strait of Hormuz, through which roughly one-fifth of global oil and gas trade passes. Mounting fears of supply disruptions led to sharp volatility in oil and gas prices, as well as higher maritime transport and insurance costs, feeding directly into the prices of goods and services and global inflation rates.

Conversely, these developments prompted many countries to rethink their economic strategies by diversifying energy sources and supply chains, bolstering strategic reserves, and reducing reliance on sensitive trade corridors, so as to limit the impact of any future geopolitical disruptions. On the financial front, with heightened uncertainty dominating global markets, states and investors turned to safe-haven assets, particularly gold and silver.

Taken together, these shifts reveal that the global economy is no longer governed by the logic of traditional globalisation that prevailed for decades, having instead entered a new phase in which economic considerations intertwine with security and strategic calculations. In a world of mounting geopolitical conflicts and tensions, the strength of nations is no longer measured solely by the size of their output or their growth rates, but also by their resilience in the face of shocks, their ability to secure vital needs, and the preservation of their economic stability.

Hence, it appears that the "economy of crises" will not be a passing phase, but rather a governing framework for the global economy for the foreseeable future, compelling nations to reformulate their economic policies on foundations that are more flexible, sustainable, and capable of confronting rapid change. In a world of multiplying crises and intertwined interests, economic resilience, good governance, and sustainable innovation will remain the essential pillars for ensuring stability and prosperity.

Translated from Arabic with AI. Read it in Arabic