For decades, companies, investors, and policymakers operated on the comforting assumption that the global economy was underpinned by a relatively stable equilibrium. Macroeconomic and financial shocks were treated primarily as cyclical disruptions that could be managed to put things back on track toward a predictable destination — that of per capita national economic growth within a continuously globalizing economic and financial order. But this paradigm is now being challenged by geopolitical tensions, the weaponization of economic relations, the rapid advance of new technologies, and other factors.

Navigating economies and markets through this storm is possible, but it requires a commitment to building resilience, maintaining optionality, and demonstrating agility. That will not happen automatically, because there is now uncertainty about the theoretical and practical endpoints of many secular changes — from productivity and economic growth to supply chains and equilibrium interest rates. Moreover, the broader trade and payments architecture is evolving rapidly, adding to many firms’ operational complexities and planning uncertainties. For those who think this is an exaggeration, consider how our new reality has been playing out this year across three domains. First, geopolitical tensions are motivating new efforts to exploit and weaponize critical supplies. The post-Cold War era of frictionless globalization has given way to a scramble for political leverage via existing interdependencies. Both state and nonstate actors have recognized the potential to wield asymmetric power by throttling the physical arteries of global commerce. From maritime disruptions in the Strait of Hormuz and the Red Sea to the fierce contest over critical mineral supply........

© The Frontier Post (Editorial)