Half a decade has passed since financial crisis, but shadows still loom large on global economy. In the meantime, hardly anything has been done to address the key triggers that were at the epicenter of the global financial meltdown. And as famous political scientist Mr. Ian Bremmer and noted economist Nouriel Roubini rightly put it, we have reached the 'New Abnormal' era - a period where no single nation or group is secure enough to lend global leadership. Weak economies, poor job markets, loose monetary policies, high debt and asset inflation are the issues plaguing major economies. And on the top of all these, currency risks remain high where nations are printing money, depreciating their own currencies in the hope of reviving exports, thus posing a huge systemic threat for the entire global economy.
In short, all the ingredients that can trigger a financial crisis are already in place. One might expect all this to lead to an increasing sense of risk and the need to address it. Instead, what we are witnessing these days is a sense of complacency.
And here is the most terrifying part that makes current times even riskier than what we have faced before. As per IMF, around 75% of the global economic growth had come from developing economies since the crisis. However, unlike in the past, BRICS economies have lost the sheen. Almost all the emerging economies have their own set of problems to deal with. The failure to bring in critical reforms has slowed down these economies, and the willingness to sort the issue hardly seems to exist. Talking about the major players in the BRIC group, while India is reluctant to bring in tough political reforms, China is ill prepared to change the growth model from export and investment to demand based. With such attitudes, the future hardly offers any hope.
As far as collective reform measures are concerned, it's better not to expect anything on this front. The different economies have diverse economic interests, often conflicting with one another. So far, they have been good just at setting tall targets, without any focus on ways to implement them.
To conclude, the New Abnormal era is marked by huge uncertainty and instability. For these reasons, it is not likely to last for long. But it will perhaps take another financial crisis before concerned authorities wake up to the need of setting things back in order. Till then, the period of transition is likely to continue. And the players who will come relatively shock proof will be the ones quick to act on financial, economic and political reforms.