Surface Ripples

Is Globalisation in Retreat?

From the late 1980s two roughly the end of the first decade of the new millennium, globalisation was the rage. Goods which would normally be expensive at home dropped in price as the manufacturers outsourced manufacture to low-cost countries. As part of this, a huge and complex global supply chain group developed alongside. Consumers, manufacturers, labour markets in low-cost countries, and transport companies all benefited.

All this was great whilst it worked. Look at what we are facing now however, and one begins to wonder whether globalisation is finally coming to an end.

After years of “cheap money“ following the financial crisis of 2008 to 2009, interest rates are now rising. Global inflation is also rising, putting pressure on central banks to increase interest rates even further. The US dollar is at its strongest for some time, meaning that those with US dollar debt Have a problem. Shares have dropped in terms of value meaning that pension funds are also shrinking resulting in reduced purchasing power for pensioners.

The question now is whether we are in for a period of economic uncertainty for a major sea change. The coronavirus pandemic of 2020 to 2022 has taught us the danger of outsourcing the supply of critical goods and equipment overseas because, as was clearly demonstrated if a pandemic hits the country that manufactures those goods, those goods will not be in production. This will mean that certain goods will now be “insured“ again and this means a possible increase in price.

Additionally, in order to keep their economies going, governments poured huge amounts of money into compensating workers for drugs that, of course, could not be done due to social distancing requirements. Those governments are now working out how to repay this debt, some perhaps with more success than others.

Events in the Ukraine also resulting in great uncertainty.  Oil and gas prices have increased as a result putting all economies on the more stress.  We may also see an increase in defence spending amongst the countries that constitute the EU and that are members of NATO.

In many of the developed countries, populations are a dream. This means significantly increased costs in the healthcare in general.

Will we see countries retreating into economic and financial isolation? Personally, I don’t think so. What we will see is a review of supply lines for what are considered essential goods and services for economies, a review of defence spending, more of a tilt towards energy sources that rely less on oil and gas. The global supply chains are still heavily interlinked and will take time to dismantle (just as they took time to build in the first place). What I do think we will see is a restructure of the global economic order but whether this is for better or worse has yet to be decided.

I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With a wealth of international experience in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management.  I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services.  For strategic questions that you should be asking yourself, follow me at @wkm610.

Labels: Financial, Productivity, Selling, Strategy

posted by William Martin @ 12:39