Economist Mohamed El-Erian Warns of the End of Globalization and a Shift Toward Fragmentation
Dr. Mohamed El-Erian, a prominent global economist and chief economist at Allianz, has called for nations to strategically reposition themselves with an emphasis on resilience and flexibility to navigate profound global changes. He cautioned that the international economic landscape is no longer adhering to its traditional rules.
This statement was made during his participation at the "MOMENTUM 2025" development financing conference in Riyadh, themed "Leadership in Development Transformation." El-Erian asserted that traditional globalization has come to an end, giving way to a new phase he termed "fragmentation." He noted, "The world is not collapsing according to its previous rules; rather, it is transforming at higher levels, necessitating a reevaluation of economic policies."
El-Erian elaborated on the fundamental reasons prompting the need to anticipate the unexpected, highlighting the significant technological advancements that have emerged as key drivers of change. He pointed out that artificial intelligence is a primary force behind current economic shifts, alongside advancements in technical sciences and quantum computing, which are expected to have a substantial impact over the next decade.
Regarding the prevailing narratives, El-Erian emphasized that local economies are no longer following traditional models. Instead, they must liberalize regulations and facilitate investment in a world where trade and investment are often used as leverage. Globally, he remarked that we have transitioned from an era of absolute globalization to one characterized by fragmentation, a concept also referred to as "manageable globalization" by former UK Prime Minister Gordon Brown.
El-Erian stressed that these rapid transformations, whether geopolitical or technological, compel major powers, including Saudi Arabia, to focus on economic diversification, enhance human capital, and invest in critical sectors to bolster resilience.
He concluded that succeeding in this changing world requires three key elements: flexibility in the face of shocks, resilience, and the ability to recover from challenges, along with innovative thinking to redefine strategies in alignment with the new reality.
El-Erian remarked, "These characteristics will significantly aid local markets and enable economies to implement the necessary changes in a rapidly transforming world."
