While central bankers’ aggressive interest rates are not helping global economic stability, political leaders are further endangering the situation. Geostrategic actions that hurt global trade are hardly what the world economy needs. Will things change for the better with the 2024 US election?

In the 1930s, the world descended into depression, multilateral trade suffered, regional blocs became protectionist and international tensions rose. Could the global economy be heading for tumultuous times again, as a US-led group of nations seeks to decouple, or ‘de-risk’, from dependence on China?

Given the state of the global economy, the recent bull runs are merely a result of investment institutions like pension funds having nowhere else to park their money This is a structural problem and there are worthier causes that needed funding.

China has perhaps more to lose than the US but in economic wartime, national interest and economic security concerns can triumph over reason. Besides, China has a ‘secret weapon’: it can devalue the yuan

The West’s efforts to split the world into rival economic blocs will spark a new wave of global protectionism which will leave everyone poorer. Whether the West calls it de-risking or decoupling, the underlying impulse is still a desire to maintain US and European supremacy.

Summits like G7 have become a stage for political manoeuvring and divisions rather than platforms for dialogue to solve critical global problems.

It is clear to everyone except US lawmakers that the latest stand-off over the US debt ceiling will have sweeping repercussions. Washington’s actions will do more than reputational damage to the US dollar, acting as a catalyst for badly needed global monetary reform.

Questions about global financial risks and the unipolar dollar system should be high on the G7 and G20 summit agendas, but they are not.

The Innovative Finance Facility for Climate in Asia and the Pacific will leverage lending on mutual guarantees, a first for a multilateral development bank, boosting the pot for climate finance.

The US economy seems to be heading towards recession, while China’s economy appears to be recovering quite well. Washington’s recently altered tone in official exchanges with Beijing may reflect this changing reality.

The effects of a long period of low interest rates being followed by sharp rate increases are likely to be long-lasting and produce more than a mild recession. Rather than repeatedly tightening regulations after a crisis, policymakers should focus on ending quick fixes such as monetary or fiscal easing.

The global economy is not just splitting into two as a result of cynical political manoeuvring; it is in danger of falling apart. Financial markets need to grapple with the impact of the geopolitical climate, rather than seeing it as something that concerns politicians only.

Politicians and policymakers around the world have reason to be concerned over the rise of AI that can analyse their actions and point out their many flaws. While AI-driven analysis itself would not be a guarantee of policy reform, it would at least provide alerts of potentially contradictory aims.

Outside China, banking and finance often seem more of a black box than is healthy for the system. We need a better design for the benefit of many, not bonuses for the few.

Decades of easy money have led to high levels of corporate debt worldwide and in Asia especially. Now with the sharp rise in interest rates, businesses – particularly small and medium-sized firms that are the backbone of economies like Hong Kong – risk defaulting on their loans.

As the West heads for a period of financial fragility, China needs a stable Ukraine to bring its grand infrastructure project back to life – and change the balance of economic power.

So many distractions have taken attention from supply chains that the danger of the world’s vital economic organs collapsing has been concealed from view. In the absence of voices of reason, political leaders are being led by the nose into recession, possible economic depression or even outright conflict.

The new president should pull the institution, which has begun to resemble a social lending institution, back onto a more bank-like track. If he can persuade its government shareholders to allow the bank to “securitise” some of its projects, it would open the door to a new hybrid form of private and state capitalism.

Rising interest rates, a colossal increase in borrowing and the remarkable lack of concern on the part of policymakers, economists and investors all add up to trouble.

Instead of setting the global geopolitical agenda, Asia is stuck following a US intent on dividing the world into rival blocs. Countries in the region will only lose if they have to take sides, so leaders must find the courage at the upcoming summits to demand an end to the great power madness.

Egged on by free-market ideologues, stock markets have funnelled too large a portion of savings into a too-narrow base of investments. The financial sector must find new ways to deploy the funds it collects in great quantity but often wastes through a myopic focus on short-term gains.

The IMF has learned nothing from its failures in the 1997 Asian financial crisis and continues to try to dictate how Asian countries pursue their interests. Asia needs greater autonomy to make its own financial decisions without Western meddling, but better China-Japan cooperation is needed for that to happen.

The cheerful mood at the World Economic Forum is at odds with a world mired in war, inflation, US-China tensions and recession fears. Business leaders should have been demanding an end to the conflicts and competition ailing the global economy; instead they sought to downplay them.

It’s safe to say US-led democracies will be on one side, and China and Russia leading the other. But how many others will join the second camp as economic conditions deteriorate? Beijing is in a relatively strong position to strengthen its position while the US and its allies struggle with economic problems.

The central banks of China and Russia are among those making huge purchases of gold amid geopolitical tensions. The two countries are almost certainly ‘weaponising’ the precious metal, which will only push up its price.

The enormous market losses of 2022 highlight a need to rein in the tendency of investors to pour money into one place. This is all the more important given the unmet demand for funding in areas like pandemic readiness and climate resilience.

Few people seem aware as a liquidity crisis offers few clearly visible symptoms until it begins to affect the internal organs of the financial system. It could be that the potential risks involved will not crystallise on a scale that threatens the financial system, but past crises offer little reassurance.

Stock and capital markets are not keeping up with the pace of progress elsewhere, potentially forcing governments to raise taxes to fund needed development. Evolving would enable stock markets to direct savings into areas essential to human and planetary welfare rather than financial wealth accumulation.

Competition, instead of cooperation, is not the way to go about building infrastructure and improving the global economy. As the US, EU and others try to outdo China’s Belt and Road Initiative with a mishmash of rival plans, they simply risk wasting taxpayers’ money.

With market realists warning of ‘bumpy times’ and a ‘mild to hard recession’, the great financial reckoning that has been warded off for too long is finally upon us.