Welfare state policies on the rise again globally

It was predicted that rates of economic growth rates which dipped in 2022 in many developed countries would bounce back in 2023.

However, the uncertainty about how high inflation and the energy crisis due to the Russia-Ukraine war will impact the economy and the question of how energy supply security will be ensured remains a serious risk for both inflation and economic growth.

Therefore, in 2023, the direction of the world economy will be determined by the policies implemented in the shadow of the double-whammy of inflation and economic recession.

Meanwhile, with the Covid-19 pandemic, the deterioration in supply chains in the world and the increase in inflation along with increasing input prices have disrupted all macroeconomic balances. First of all, there is a need for time for production to reach the pre-Covid-19 period erato the supply shortage experienced in the goods produced in numerous sectors.

In addition, the fact that many countries' central banks entered the race to increase interest rates due to high price increases brought the expected economic growth of 2-3 percent in the world economy to the brink of economic stagnation.

For this reason, any improvement in the inflation outlook is seen as the primary target in order to increase economic growth in the world economy and prevent economic stagnation.

A possible decrease in inflation rates, expansionary monetary policies, and a possible increase in expenditures will lead to an increase in economic activity, which in turn will accelerate the increase in investments as well as give a boost to trade between countries.

This possibility is a hoped-for prospect.

However, with Covid-19 in the world economy, both the disruption of trade in important inputs required for production and the return of economic protectionism, as well as the problems experienced in energy, which is a strategic input for production, stand out as the biggest obstacles facing production and trade.

Perhaps in the new period, the trade wars between countries will be in the form of not sharing the production inputs of each country anymore. This will be an important issue, triggering a significant slowdown in global production and price increases.

SOCIAL POLICIES IN THE PERIOD OF STAGLFATION

The most important feature of this period is the return of welfare state practices.

Due to the high inflation and decrease in production caused by the current economic policies in many countries, wage hikes are made to compensate for the loss of welfare experienced, on the other hand, many different social policy policies are implemented in the fields of housing, education, and healthcare.

Meanwhile, subsidies and government support practices are being implemented to offset the rise of energy prices.

To put it bluntly, this is the time when welfare state policies are needed the most.