Economist Mohamed El-Erian Warns of Globalization's End and a Shift Towards Fragmentation
Dr. Mohamed El-Erian, a prominent global economist and chief economist at Allianz, has urged nations to strategically reposition themselves to enhance resilience and flexibility in light of profound global changes, cautioning that the international economic landscape no longer adheres to traditional norms.
His remarks were made during the "MOMENTUM 2025" development financing conference in Riyadh, themed "Leading Development Transformation." El-Erian indicated that traditional globalization has concluded, giving way to a new phase he termed "fragmentation." He emphasized that "the world is not collapsing under its own rules, but is evolving even at its highest levels, compelling us to rethink economic policies."
El-Erian elaborated on fundamental reasons that necessitate anticipating the unexpected, highlighting significant technological advancements as a primary driver of change. He pointed out that artificial intelligence, along with technical sciences and quantum computing, will significantly influence economic shifts in the coming decade.
Regarding the two prevailing narratives in the current landscape, El-Erian noted that locally, economies can no longer follow traditional patterns; instead, they must deregulate and facilitate investments in a world where trade and investments are wielded as tools of leverage. Globally, we have transitioned from an era of absolute globalization to one characterized by fragmentation, described by former British Prime Minister Gordon Brown as "manageable globalization."
El-Erian stressed that these rapid geopolitical and technological transformations require major nations, including Saudi Arabia, to focus on economic diversification, strengthen human capital, and invest in critical sectors to enhance resilience.
He concluded by stating that success in this changing world necessitates three key components: flexibility to withstand shocks, resilience to recover from challenges, and innovative thinking to reconfigure strategies according to the new reality.
El-Erian remarked, "These attributes will significantly aid local markets and enable economies to achieve the necessary transformation in a rapidly changing world."
