Slobalisation - The New Expression

Slobalisation - The new Expression

Slobalisation is comparatively a very newly coined term in business community and affiliated field. Let’s see what is exactly it means and reasons for it.

If you look into World GDP growth rate from Year 0000 AD to 1900 AD, it was around 1% (even less) on an average and suddenly in last 50 odd years, we have seen World GDP is growing at the rate of average 3% or sometime even more than that sometime around 1970. All this growth is fueled by industrialization and consumerization but at the same time it was backed by policies adapted by many countries based on rapid Globalization and Free Markets (LPG Model). And this has changed the economic setup of the world dramatically.

Starting from late 80’s for almost next 20 years, it was golden period for globalization. This has increased the availability of products and services across the world as well as at competitive pricing. In nutshell it has created a net positive effect on our global society, though with some distributional concerns.

But as we are seeing in last decade, the fact is global trade is going down for various reasons. And many countries started focusing on domestic or regional economies weakening global institutes like WTO. In current Covid-19 situation, WTO estimates that the global trade may fall to 32% in worst scenario. And it is evident that Globalization is slowing down.

This slowing down of the rate of Globalization is called as the Slobalisation. This does not mean end of Globalization, but slowing down the process.

There are many reasons for this Slobalisation and this has started much before the current Covid-19 pandemic. Most of the experts agree that it started with 2008-09 financial crisis. And now accelerated with recent year’s trade wars, protectionism policies, rise of nationalism and the rising debt of countries. We can see the indicator of the same by correlating with Chinese industrial output which is at 30 year record low. And this current pandemic has made the situation uncertain and grim.

Now all the countries would like to focus more on their own economies, less imports, currency manipulation and so on. Now Governments will play major role in the Economy than Free Markets continuing Slobalisation. This will lead to more controlled economic activity and we may see the period of slow growth across globe.

But every cloud has a silver lining. When it comes to India, we had difficulties during 1990 foreign exchange reserves crisis, sanctions after nuclear tests, 2008-09 financial crisis. But India has a nice track record of emerging quickly from such setbacks. Experts believe that with sheer size of economy, domestic consumption and with young population, India will have less impact of Slobalisation. UN has also given very positive outlook on Indian Economy in long term.

And we all hope that with focused government policies, India will sail through and emerge as much better economy in the world.

Stay Safe ! Jai Hind!!

Mahendra M Nimkar