Trade growth is slowing and international financial flows are stuttering. Are we seeing the demise of globalisation?
I do not think so. While some aspects of globalisation are reversing — probably for good reasons — others are growing. We need to make sure the parts that are growing are safe and sustainable so that globalisation evolves in ways that direct capital to where it has the most benefit for the world economy.
Consider how cross-border financial flows have changed since the crisis of 2007-08. There had been a massive increase in capital flows driven especially by banks becoming more international. But then, as the instability of the system became painfully clear, market participants woke up to the risks and regulators left the era of the “light touch” behind.