Augusto Lopez-Claros

This lecture will provide a comprehensive overview of the latest forecasts for the global economy, drawing on the most recent assessments by leading international institutions such as the IMF, the World Bank, and other multilateral bodies. It will examine key trends shaping the global outlook, including slowing growth in advanced economies, divergent recovery paths across regions, persistent inflationary pressures, rising debt vulnerabilities, and the economic implications of geopolitical tensions and climate change. Particular attention will be given to the policy challenges facing governments, including the calibration of monetary policy in a context of fragile growth, the need to rebuild fiscal space while protecting vulnerable populations, and the urgency of accelerating structural reforms to boost productivity and resilience. The lecture will also explore the risks of financial fragmentation and assess the prospects for renewed international economic cooperation in an increasingly uncertain global environment.

The contemporary crises faced by humanity require a new kind of international agreement. One which will prevent accelerating climate change from ruining the world for future generations, deescalate the high levels of nationalism which risk precipitating further global conflicts, and address economic and social inequities which could undermine the basis of democracy and good governance. One which will remove the possibility of the use of nuclear weapons and place global security on international agreements securing freedom and democracy for all nations rather than on the military preparedness of individual states.

This is a world which the UN, as currently constituted, with its decision-making capacities paralyzed by the veto powers of its permanent Security Council members, cannot achieve. If, as noted by United Nations Secretary-General Guterres, “global governance is stuck in time and we cannot effectively address problems as they are if institutions don´t reflect the world at it is” then what should a new UN Charter look like, to modernize our global governance architecture and empower the UN to help us address the myriad global catastrophic risks which threaten our future?

Gender discrimination is often seen from a human rights perspective; it is a violation of women’s basic human rights, as embedded in the Universal Declaration, the UN Charter and other such founding documents. Moreover, there is overwhelming evidence that various forms of discrimination against women are also bad economics. They undermine the talent pool available to the private sector, they distort power relationships within the family and lead to inefficiencies in the use of resources. They contribute to create an environment in which in many countries women, de facto, are second class citizens, with fewer options than men, lower quality jobs, lower pay, often the victims of various forms of violence, literally from the cradle to the grave. They are also not fully politically empowered and have scant presence in the corridors of power, and this may have vast security implications, making for a more violent world. We will look at some fascinating data that strongly suggests that moving to a world in which being born a boy or a girl is no longer a measure of the likelihood of developing one’s human potential is vital for human prosperity and security.

Economic and social progress and development as global objectives for improving the well-being of ordinary people is a relatively recent concept, first embodied in the UN Charter in 1945. Since then, the world has witnessed a long period of economic growth and an improvement in average life expectancy, a drop in infant mortality and a reduction in extreme poverty. But an increase in the scale of the global economy has also led to the emergence of environmental constraints and questions about the sustainability of our current economic system and its ability to deliver prosperity to all; indeed, many thoughtful scholars think that we need a new economic paradigm. What would be the key elements of a new economic paradigm, more focused on human development?

There is broad recognition that the national emission targets put forth by the Parties at COP 21 in Paris in 2015 are not consistent with limiting a temperature rise to 2◦C above preindustrial levels. Absent mitigation of GHG emissions global temperatures will be on a rapidly ascending trajectory and rise some 3-4◦C by the end of this century. Given the associated damage to the global economy and its supporting ecosystems and to the natural world more generally there has been increasing emphasis in recent years in identifying policies that might facilitate climate change mitigation and adaptation. One particular area of focus has been on the financing needs associated with significant investments in various forms of infrastructure, including investments in energy efficiency and renewable energy.

Such investments—in the tens of trillions of dollars over the next decade—would have to prioritize building low-carbon resilient infrastructures, with nearly two thirds of these outlays taking place in emerging markets and developing countries. The aim is to find fiscal tools and regulatory policies that might make it costlier to emit GHGs and thus provide the types of incentives for businesses and individuals to choose to conserve energy and/or to switch to more environmentally friendly (greener) sources. This question moved centerstage against the background of COVID-19, the responses to which greatly stretched budget resources virtually everywhere. Some of the instruments discussed in this lecture are fundamentally aimed at altering incentives as a way of encouraging a shift to a low-carbon economy (e.g., carbon taxes, green financial instruments), while others are mainly intended to raise revenue (e.g., taxing financial transactions, debt relief, improving/modernizing tax systems), which then governments could use, at least in part, to finance climate change mitigation.

Financial resources will also be needed for adaptation and to boost resilience, in such areas as food security and agricultural productivity, emerging water scarcity, and disaster risk management. Without the types of interventions that improve adaptation and resilience climate change will severely put out of reach the attainment of many of the SDGs, including on the elimination of extreme poverty. It could also make the world more vulnerable to the kind of pandemic that devastated the global economy in 2020. 

In the face of global inequality, climate stress, democratic backsliding, and technological disruption, the dominant growth-driven economic model is no longer fit for purpose. This lecture will argue that we urgently need a paradigm shift—one that places human development, rather than GDP growth, at the center of economic design.

Drawing on evidence from both high- and low-income countries, we will examine how excessive income concentration undermines democracy, fuels instability, and stifles innovation. The talk will also explore policy levers—progressive taxation, social protection systems, investment in women’s empowerment, and global fiscal coordination—that can redistribute opportunity and wealth in more equitable ways. Special attention will be given to the links between fairer economic outcomes and greater resilience in the face of global risks such as pandemics and climate change. A new vision of prosperity, grounded in equity and planetary sustainability, is not only necessary—it is achievable.