Economist Eswar Prasad warns a ‘motley group’ of middle powers can’t stop the ‘doom loop’ threatening the global economy

The global economy is facing significant challenges as middle powers struggle to align their interests, leading to a "doom loop" that threatens economic stability. According to Eswar Prasad, a senior professor of trade policy at Cornell University, the "motley group" of middle powers, which includes countries outside of the US and China, are unable to present a united front against the economic might of these two superpowers.

What Happened

In recent weeks, several key events have highlighted the challenges facing the global economy. Target, the US retail giant, announced a $6 billion plan to revive its fortunes, while venture capitalist Adam Zeplain revealed his unconventional approach to due diligence, which involves researching the family background of startup founders. Meanwhile, Block, the parent company of Square and Cash App, announced a major workforce reduction, despite reporting strong profits.

Why It Matters

The global economy is facing a "rupture" according to Mark Carney, Canada's prime minister, as great powers like the US and China use economic integration as weapons, tariffs as leverage, and financial infrastructure as coercion. Middle powers are struggling to respond to these challenges, leading to a "doom loop" that threatens economic stability.

What Experts Say

"We're not at the table, we're on the menu." — Mark Carney, Canada's Prime Minister

"The rules-based international order is experiencing a rupture." — Mark Carney, Canada's Prime Minister

"This is not one-size-fits-all. Sure, there are certain tenets you can repeat and reuse. But this is a tailored approach." — Adam Zeplain, Venture Capitalist

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Key Facts

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What Comes Next

As the global economy continues to face significant challenges, it remains to be seen how middle powers will respond to the "doom loop" threatening economic stability. One thing is clear, however: the AI boom is here to stay, and its impact on markets and venture capital flows will be significant.