The international economy facing recession – Society on the brink of explosion

Translated from “Workers Struggle”, February 2024, monthly newspaper of O.K.D.E

In late January, the data from the International Monetary Fund and the World Bank on the course of the international capitalist economy were published. Despite some reservations, a sense of relief prevailed as it was observed that the global capitalist economy is not sinking into a recession, as many had feared. Instead, it is experiencing a “soft landing” after the rise in interest rates to address inflationary pressures. However, even if the “landing is soft,” these organizations predict that growth for 2024 and 2025 will be limited, and the entire decade of 2020-2030 is likely to be a lost decade.

The relief is mainly attributed to the better-than-expected performance of the U.S. economy. The U.S. economy growth was 2.5% in 2023, but it is projected to be 1.6% and 1.7% in 2024 and 2025, respectively. In the twenty countries of the Eurozone, results are disappointing, with growth falling to 0.4% for 2023 and projected to be 0.7% and 1.6% for 2024 and 2005. The performance of Germany and France is even worse, with Germany already in recession in 2023, with its industry contracting by 7%. The German industry, after the rupture with Russia (increase in oil and gas imports) and the worsening of trade relations with China, is continuously weakening and may have started a cycle of decline.

On the other hand, the emerging imperialists are doing much better. Despite war and sanctions, Russia’s GDP increased by 2.6% in 2023, and this growth rate is expected to continue in 2024 and 2025, possibly at an even higher rate. China performed well, surpassing predictions with a 5.2% increase in 2023, and similar rates are expected for the next two years. Indonesia experienced a 5% increase, expected to continue in the next two years, while India reached a GDP growth of 6.3%, projected to remain steady in the coming years. The same positive trend applies to Turkey (4.2% in 2023) and even to Brazil, which, despite its problems in the last decade, had a 3.1% increase in 2023, expected to be maintained in the coming years.

This evolution of the global capitalist economy is mainly attributed to weakened investments. In the 2020-2024 period, investments will have the worst performance in the last 35 years, primarily due to the old imperialists, particularly the EU and Japan. A similar situation is observed in global trade, where there is stagnation in 2023, and for the next two years, it will move at 2.3% and 3.1%, i.e., below the average of the last thirty years.

The social explosion is near

These developments in the global capitalist economy not only exacerbate the divergence between old and new imperialists (thus intensifying wars and further disconnecting the economy) but also prove incapable of mitigating sudden crises due to structural and heightened imbalances (debt escalation, climate crisis, social inequalities, geopolitical conflicts, and tensions).

However, if one focuses solely on economic developments, the full reality may not be fully revealed. The profound and structural crisis of the global capitalist economy has already translated into a deep social and political crisis ready to erupt and further worsen the economy. In general, the economy may be moving towards a “soft landing,” as supported by the IMF and the World Bank, but the economy has acquired a dual and extremely contradictory character. There are two realities (as seen in two surveys in our country: one by GSEE* and one by SEV*): the reality of businesses and the bourgeoisie, which is possibly doing relatively well for the time being, and the reality of workers and the poor masses, which is constantly deteriorating. 1.8 billion workers are in countries where inflation is dramatically higher than wage increases, and for the remaining 2 billion, things are not better. At the same time, the external debts of the 75 poorest countries have skyrocketed, as have their repayments costs, to such an extent for the first time, while loan interest rates for several countries have also soared (Egypt at 26%, Turkey at 25%, Pakistan at 16%, etc.).

This prolonged suffocation of workers has reached an unsustainable point with the recent inflationary onslaught and has created a deep societal crisis, already translating into a profound political and international geopolitical crisis. The grim state of the economy will be insignificant in the face of the impending loss of control over the economy and society by the bourgeoisie.

*GSEE is the Greek CGT

*SEV is the Association of Greek Industrialists