The contemporary global landscape is characterised by increasingly complex geopolitical and economic dynamics, chaotic power shifts and rapid collapse of the world order. A new era of regional and sub-regional alliances, reset of the existing coalitions, and reevaluation of the bilateral cooperation frameworks is already on the anvil with serious ramifications especially for the countries in the global south.

Since World War II, the transatlantic alliance between the United States and the European Union has been a bedrock of global economic stability, multilateralism and institutional development. Together, the US and EU account for nearly 43 per cent of global GDP and 30 per cent of global trade. However, the widening schism manifested in competing strategic priorities, trade approaches and economic differences have begun to undermine the traditional allies, engendering new coalitions and multiple power centres.

Key sources of divergence include the USA's increasingly protectionist economic stance under the Inflation Reduction Act (IRA), Europe's more conciliatory approach to China, contentious energy and IT policies, Ukraine war, tensions over defence burden-sharing in NATO and climate change. The result is a fragmentation of global economic governance, blow to multilateralism and volatility of trade and financial markets.

At the same time, a massive shift of economic power to Asia has already flounced the world: 21st century is regarded as the Asian century. In 1960s, Asia did not find even one slot among the top 5 economies; whereas now 3 of big 5 global economies are in Asia – China,........

© The Express Tribune