Our Mega-Threatened Age: Why Reasons For Optimism Are Scarce

The world economy faces a polycrisis' as the Great Moderation recedes further and a Great Stagflation threat looms large

- NOURIEL ROUBINI

Since the publication of Megathreats in October 2022, the themes I emphasized have gone mainstream. Everyone now acknowledges that economic, monetary and financial threats are rising and interacting in dangerous ways with various other social, political, geopolitical, environmental, health and technological developments. Hence, in December 2022, the Financial Times chose “polycrisis" as one of its buzzwords of the year. Whatever one’s preferred term (others have adopted “permacrisis" or “confluence of calamities"), there is growing recognition that not only the global economy, but also human survival is at risk.

As I warned in Megathreats, the so-called Great Moderation (a long period of low macroeconomic volatility following the mid-1980s) has given way to the Great Stagflation. In 2022, we witnessed a surge of inflation in advanced economies and emerging markets, a sharp slowdown of global growth that continued into 2023, and signs of severe private- and public-sector debt problems as central banks raised policy rates to stabilize prices.