Policymakers are struggling to cope with global upheaval

At the beginning of the year, it was blatantly obvious that 2016 was going to be an interesting and unpredictable year, and as we move past the halfway point, that is exactly how it has transpired.

In fact, it has undoubtedly surpassed all expectations on both the economic and political front, and the second half promises much more of the same.

The global economy has continued to prove very problematical.

The eurozone has continued to struggle to gather any real momentum, forcing the ECB to move into negative interest rate territory and to increase the monthly quantitative easing programme by €20bn per month.

It is probable that official interest rates will be moved further into negative territory over the coming months and it would not come as a shock to see an expansion of the quantitative wasing programme.

It will be interesting to see if the political system steps up to the plate with meaningful policies to boost growth. We probably should not hold our breath on that particular issue.

When the Federal Reserve increased interest rates last December it signalled clearly more of the same during 2016.

That has obviously not transpired and the bank clearly believes that the world economy is still way too fragile to risk further tightening of policy for the moment.

China has faded into the background somewhat as an issue, but this may not be justified.

China is still a source of concern and will remain a source of concern, not least because of the massive debt overhang.

All in all, the interest rate and monetary policy environment is truly bizarre and does suggest that global policy makers are struggling badly to cope.

The current global policy toolbox is clearly lacking.

A much more revolutionary approach is needed if ‘secular stagnation’ is not to become a real and semi-permanent feature of the landscape.

On the political front, it has also been a very strange year so far.

Donald Trump has obtained the Republican nomination and we can now only look forward to some really interesting and very concerning developments ahead of the November election.

Hillary Clinton is in somewhat of a pole position at the moment, but anything could happen over the coming months.

If there is one thing that the Republican convention showed, it is that Trump is going to fight a very divisive, bitter and vitriolic campaign.

That is not good news for the US and promises to make it an even more divided society.

The biggest shock of the lot has been the UK political system.

Against the odds, the UK electorate vote for Brexit and the political system has been thrown head over heels subsequently.

The Labour Party could be on the brink of making itself virtually unelectable for the foreseeable future if Jeremy Corbyn manages to hold on to the leadership, which is the more likely outcome given the electoral system in the Labour Party.

The Conservative Party has also been turned upside down and with three interesting proponents of Brexit in key position to drive the future of the UK in the EU or outside it, as the case might be.

Brexit will be the most discussed event in this part of the world at least for months and years to come. It has the potential to rock the EU to its foundations.

Of course the other big story so far this year is on the global terrorism front.

The Paris attacks last November have been followed up with a series of atrocities that are unfortunately ongoing.

Turkey has just faced down a coup and the Syrian situation is still horrific, as is the case in most of the rest of the region.

From a geo-political perspective, the world is truly a scary place at the moment and it is very hard to see how it could be brought to a satisfactory and peaceful conclusion.

In fact, it promises to get a lot worse and a lot scarier.

From an Irish perspective, all of this has created an incredibly uncertain backdrop.

While the Irish political system might look relatively stable compared to many other countries at the moment, it is far from clear that our current political configuration will be sufficiently robust to enable us successfully navigate the very troubled waters in which we are currently caught.


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