“The old world is dying, and the new world struggles to be born: now is the time of monsters.” — Antonio Gramsci
As 2025 crosses its midpoint, the quote feels less like history and more like a diagnosis. The first six months have raised more questions than answers. Markets swung between complacency and alarm. A brief flare-up between Iran and Israel threatened to rattle oil supplies. Populism surged across the West, central banks sent mixed signals, and the architecture of the global economic order continued to fray.
The world is drifting through a liminal phase — no longer buoyed by the certainties of the post-Cold War era, yet not anchored to anything new. The Washington Consensus, once the lodestar of global economic orthodoxy, is being set aside along with ideals of frictionless trade, central bank independence and fiscal restraint.
What is emerging is more chaotic: a cacophony of tariffs, populist realpolitik, fiscal firehoses and monetary murk. Trade has become transactional. Policy signals conflict across borders and supply chains are being rewired for resilience. In this shift from globalisation to fragmentation, the old architecture is creaking under the weight of multipolar ambition. The risk is not only that the scaffolding collapses, but that it is replaced by something even more unstable.
Global growth is grinding lower. According to the World Bank’s latest Global Economic Prospects report, the world economy is expected to expand by just 2.3% in 2025, its slowest pace outside of recessions since the global financial crisis. Nearly 70% of countries have had their forecasts downgraded.
Trade, historically the lifeblood of emerging markets, has lost its pull. Global trade growth has slowed to below 3%, far off the 5% average of the 2000s. Investment has flagged, dragged down by geopolitics, softer commodity prices and tighter financial conditions. The World Bank warns this may be the slowest-growing decade since the 1960s.
Few forces have rattled the global economy as abruptly as US trade policy. The Trump administration’s tariff offensive in early 2025 roiled markets. Effective tariffs soared to 27% — the highest since 1936 — before cooling to 15.8% after a tentative truce with the EU and China. Even so, the scars remain.
Yale’s Budget Lab estimates that the current tariff regime, if sustained, could shave 0.6% off US GDP through 2035, lift core inflation by 1.5 percentage points and disproportionately burden lower-income households.
Tariffs, once a footnote, now dominate headlines. They act like supply shocks in the countries that impose them — and demand shocks everywhere else. But in an economy as entangled as today’s, textbook dynamics often misfire. Markets grew complacent in a disinflationary world, yet inflation now threatens to return in more erratic, politicised forms.
If central banks are rethinking old rules, treasuries are already rewriting theirs. The US’s One, Big, Beautiful Bill Act, passed this month, will cost $3.7-trillion over a decade, with the Congressional Budget Office estimating publicly held debt to hit 118% of GDP by 2035, well beyond the post-war high.
While the dollar’s hegemony remains intact (for now), backed by deep markets and institutional strength, the ground is shifting. Brics countries are accelerating de-dollarisation efforts, and gold is in vogue. The World Gold Council notes that central banks are restocking, with 95% expecting global reserves to rise next year. China’s unofficial gold hoard may already exceed 5,000t.
Early cracks in confidence around the dollar are appearing. But reserve currency status is not lost in a single moment — it fades through attrition. Once trust slips, it is hard to reprice.
In a world where global backstops are weakening, emerging markets must rely more on internal strength. South Africa illustrates how domestic reform must become the main lever for growth. The formation of the GNU has brought short-term policy stability, but growth remains anaemic, with just over 1% forecast for 2025. Debt is ballooning. Without consolidation, the International Monetary Fund sees it rising to 88% of GDP by 2030.
Still, there are signs of progress. Inflation has fallen below 3%. The country is on track to exit the Financial Action Task Force greylist later this year. Infrastructure bottlenecks are slowly easing under the Operation Vulindlela reform drive. Relations with the US, once tense, are improving, though slowly.
Yet with global trade reorganising and external demand weakening, South Africa, like many of its peers, must increasingly look inward. The post-globalisation world rewards resilience over reliance.
We are living through a phase of suspended certainty. US tariffs swing like wrecking balls. Fiscal rules bend to politics. Central banks juggle inflation, debt and credibility. Markets lurch between panic and euphoria, seeking footing on shifting terrain.
The architecture of the past three decades — built on open trade, fiscal prudence and institutional credibility — is cracking. What comes next may be less stable, less co-operative and more contested. A new world is being born, but it is arriving without clarity.
Packirisamy is chief economist at Momentum Investments