Prospective trends in the world economy under the influence of global challenges: projections for Ukraine

Abstract

The main trends in the development of the world economy in the context of global challenges caused by geopolitical crises and wars and serious changes in demography, world wealth, technology, and climate are analyzed. The systemic risks of trade tensions, the growth of the debt level, and the decrease in the monetary policy’s effectiveness in the world's leading economies are studied in the context of Ukraine. The negative trends of a consistently high level of core inflation, which will require a further increase in interest rates or a prolonged maintenance of their high indicators, are outlined. High inflation has led to an erosion of real incomes and a global cost-of-living crisis, pushing millions of people to the brink of poverty and economic hardship. The reasons for the deterioration of the economic situation in the United States, the EU, China, and other leading world economies affecting the economies of other countries are examined. Consumers have been cutting back on their spending due to rising interest rates, lower real incomes, and a significant decline in household net worth. The dependence between the deterioration of macroeconomic stability in the world and additional threats to economic security and international support of Ukraine is detected. Therefore, based on the study, the author substantiates the following priority initiatives: the expediency of independent formation by Ukraine of an environment that will be favorable for the development of domestic entrepreneurship in the open economic space and capable of withstanding competitive pressure in the domestic and foreign markets; accelerating the implementation of the European Commission’s package of recommendations and the successful completion of basic reforms; creating conditions for attracting and improving the security of investments in Ukraine in wartime; accelerating integration into the European economic area. It is important to increase investors’ confidence in Ukraine through the use of investment protection tools, in particular investment insurance, strengthening control over the fulfillment of contractual obligations under investment agreements, strengthening the legal framework, expanding cooperation with international organizations, providing access to a fair trial within independent arbitration courts, conducting structural reforms aimed at improving the business climate, easing bureaucracy, and increasing accessibility of information for investors.