While we’ve been talking about unsustainable economic growth for a while now, we seem to have finally reached a tipping point. As work and profit demand to meet shareholder expectations become unrealistic, the world’s economic growth may slow. In this year and the next, the International Money Fund projects nearly half the growth from 2021.
Numerous major socio-political events have shaken the world to its core in the last few years. The pandemic, along with the Ukraine war, have put a major strain on supply chains for various vital goods. That has significantly slowed global production.
On top of that, Europe’s sanctions towards Russia mean the continent is having a much tougher time meeting its energy requirements. That has caused energy crises across the continent, with power shortages and price hikes.
There’s also been a mass restructuring of the workforce, with the world adapting to work-from-home models. Massive layoffs and resignations have also caused workforce shortages as the gap between employer and employee expectations grow. That is especially noticeable with high-skilled workers or those with specific skills and knowledge.
And when you add the record-breaking worldwide inflation to all of that, you truly get a deadly concoction. Just about everything is going wrong economically, while expectations of persistent growth have remained the same. However, the world just can’t seem to keep up with it anymore.
In 2021, global economic growth was estimated to an even 6%. It jumped over 2020’s 4.9%, which is to be expected due to the intensity of the pandemic that year. However, even with a pandemic shutting most of the world off, growth in 2020 was higher than 2022 estimates, which are around 3.2%. Worse yet, the shrinkage trend may catch on, as economists project a 2.7% growth for 2023. We await to see if the reduction will bring about any major economic changes.
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