In recent years, the stability that comes with broad- based adherence to the rules-based international order has been considerably weakened, as has the power of central FEROWXSVITVIWWǻRERGMEP volatility and buy time for the real economy. Bad outcomes are not inevitable (at least not yet). They could still be averted through the sustained implementation of policies to promote stronger, more inclusive growth; restore genuine financial stability; and usher in a fairer, more credible (while still free) system of international trade, investment, and policy coordination. But much will depend on the functioning of politics in the near term. Going into 2020, politicians have a favorable runway from which to launch the policies needed to extend the positive short-term outlook into the medium and long term. Worries about global recession have receded, financial conditions are ultra-accommodating, and U.S.-China trade tensions have de-escalated. But these auspicious circumstances will not last forever. Unfortunately, a policy push that could improve and clarify the medium-term outlook is unlikely. The US is entering a tense and divisive election year. Germany, Italy, and Spain are in the midst of difficult political transitions. The EU is dealing with Brexit and other regional divisions. And China’s government is trying to consolidate power in the face of slowing growth and continuing protests in Hong Kong. The main worry –
one that too few market participants have spotted – is that over the next five years, global economic and market conditions may need to deteriorate nearer to crisis levels before national, regional, and multilateral political systems muster an adequate response. Fortunately, we are now in a period when action could be taken to prevent the worst- case scenario from becoming a binding reality. Let us hope that I’m wrong about today’s political paralysis. As long as there is still time, there is a chance that policymakers will follow the advice offered by then-IMF Managing Director Christine Lagarde in October 2017: “Fix the roof while the sun is shining.” © Project Syndicate GLMIJMRZIWXQIRXSǽGIV[EWGLEMVQER of US President Barack Obama’s Global Development Council. He is president elect of Queens’ College (University of Cambridge), senior adviser at Gramercy, and part-time practice professor at the Wharton School at the University of Pennsylvania. He previously served as CEO of the Harvard Management Company and deputy director at the International Monetary Fund. He was named one of Foreign Policy ’s Top 100 Global Thinkers four years running. He is the author, most recently, of The Only Game in Town: Central Banks, Instability , and Avoiding the Next Collapse . Mohamed A. El-Erian , chief economic adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-
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