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Across continents, governments are rediscovering the limits of fiscal expansion while seeking new ways to stimulate growth. It is an experiment in reconciling Keynesian demand-management with institutionalist state-building: fiscal rules, debt-swaps, and industrial policy are being redesigned to sustain legitimacy in a low-trust, high-debt world. At the same time, the WTO’s warning of sluggish trade growth signals that the traditional trade-led growth engine is losing momentum, thereby raising the stakes for domestic structural transformation. Moreover, the IMF’s October 2025 WEO projects global growth at 3.2 % in 2025 and 3.1 % in 2026, while emphasising that risks are tilted to the downside, fiscal buffers are weak, and institutional credibility remains fragile.

The tension between macroeconomic stabilisation (controlling inflation, debt and volatility) and structural transformation (institution-building, productivity enhancement, inclusive growth) now defines policy choice—reminding us that the politics of credibility can either anchor or strangle development.

Global Trade

📉 Sluggish Global Trade Growth (WTO)

The WTO reports global trade is underperforming relative to pre-pandemic expectations. Recoveries in goods and services flows have been weak; structural bottlenecks, supply-chain fragmentation, and geopolitical headwinds are cited.

Weak trade growth raises red flags for the trade-led growth paradigm. In classical models, openness and comparative advantage drive convergence. But with low trade momentum, catching-up states must lean harder into augmented industrial strategies and deep regional integration. From a new structural economics perspective, the constraint is no longer capital, but connectivity and institutional embedding in global value chains.

Because trade acts as both a demand channel (export markets) and a discipline channel (competition, technology transfer, resource allocation), sluggish trade can undermine both growth and accountability. Hence, policies that promote regional corridors, digital trade standards, and logistics infrastructure become just as vital as subsidies or credit. And states must guard against policy capture in the process.

🌍 Africa

1. Ramaphosa’s 10-Point Economic Recovery Plan (South Africa)
Context: South Africa’s blueprint centers on infrastructure, job creation, and private co-investment.
Insight: The plan revives the developmental-state model reminiscent of East Asia, where the state coordinates capital formation under conditions of market failure. Yet, without fiscal space and credible bureaucratic capacity—concepts highlighted by Musgrave’s fiscal federalism and Evans’s embedded autonomy—the initiative risks degenerating into distributive patronage rather than transformative investment.

2. Ethiopia’s Debt-for-Development Swap Talks
Context: Addis Ababa’s negotiations with the World Bank propose converting debt obligations into SDG-linked investments.
Insight: This represents an evolution of the debt-relief–growth hypothesis: debt becomes an instrument of developmental leverage rather than constraint. Through the lens of Ocampo’s counter-cyclical financing and Green–New Structural Economics, Ethiopia’s policy could internalize external discipline while expanding fiscal room—if governance institutions prevent moral hazard.

3. Nigeria’s Inflation Slows to 18%
Context: After sustained tightening, inflation has eased for six months.
Insight: Nigeria’s case exemplifies Tinbergen’s assignment principle: monetary policy can stabilize prices only when fiscal policy supports rather than offsets it. Yet, with weak wage indexation and productivity stagnation, real incomes remain trapped—illustrating the Phillips-curve asymmetry common in developing economies.

🌏 Asia & Australasia

1. India’s Renewable Grid Stability Rules
Context: New regulation demands renewable producers guarantee frequency stability and reserve margins.
Insight: This shift from expansion to regulation aligns with Pigouvian correction: internalizing the systemic risk externality of intermittent renewables. It marks India’s transition from an installation-driven industrial policy to second-generation regulatory industrialism, where coordination failures, not capital shortages, dominate policy design.

2. Vietnam’s Private Tech Firms as Growth Catalysts
Context: Hanoi positions private innovators at the heart of its productivity strategy.
Insight: This approach mirrors Gerschenkron’s late-development thesis—states without deep capital markets rely on directed credit and technological learning. By balancing FDI spillovers with local capability formation, Vietnam is operationalizing a Schumpeterian–Listian synthesis: entrepreneurship within strategic protection.

3. Indonesia’s Carbon Market Relaunch
Context: Jakarta resumes carbon trading, integrating it with fiscal policy.
Insight: Carbon markets here are a laboratory for ecological macroeconomics: using environmental rents as quasi-tax instruments for stabilization. This reflects a turn toward Pigou-Keynes synthesis, where green taxation underwrites counter-cyclical spending.

🇪🇺 Europe

1. Turkey’s Youth Disengagement Crisis
Context: Turkey leads the OECD in youth not in employment, education, or training (NEET).
Insight: The persistence of high NEET rates illustrates Okun’s law breakdown in semi-industrial economies—growth without jobs. Policy failure lies in the absence of active labor-market institutions, which convert education spending into employability.

2. France Blocks Telecom Mega-Merger
Context: The competition authority rejected a merger to preserve consumer choice.
Insight: This embodies the ordoliberal tradition underpinning EU antitrust philosophy: markets require a “strong state to ensure freedom.” It also highlights Europe’s ongoing struggle between Schumpeterian consolidation and Hayekian competition.

3. Cyprus–UAE Economic Partnership
Context: Bilateral cooperation expands in finance and energy.
Insight: This is new-regionalism in miniature: small states leveraging policy credibility as a comparative advantage. The partnership reaffirms Viner’s customs-union theory—trade creation through specialization rather than protection.

🇺🇸 North America

1. Trump’s “Long Ag-Tech, Short China Inputs” Strategy
Context: U.S. trade policy turns protectionist while incentivizing agricultural technology.
Insight: This represents Hamiltonian industrial policy reimagined for the digital age—using tariffs to force technological substitution. Yet it also illustrates the political business cycle: pre-election protectionism framed as sovereignty.

2. Rare-Earth Confrontation with China
Context: U.S. officials call Beijing’s export curbs a “China versus the world” moment.
Insight: Rare earths have become a test case for strategic trade theory: when imperfect competition and externalities justify state intervention. The policy marks a pivot from comparative advantage to technological realism.

3. Georgia’s Health-Care Subsidy Debate
Context: State legislators consider cutting ACA subsidies, raising costs by $2 billion.
Insight: A demonstration of Tiebout competition in fiscal federalism: decentralization generates efficiency only when mobility and information are perfect. Here, fragmentation undermines the public-goods equilibrium, highlighting the social cost of localism.

🌎 South America

1. Brazil’s Record Soy Crop Ahead of COP30
Context: Agricultural output hits historic highs as climate talks near.
Insight: The environmental Kuznets curve meets political reality—Brazil’s growth model remains resource-intensive. The policy challenge is internalizing global externalities without sacrificing export rents, a tension at the heart of green developmentalism.

2. Argentina’s $40 Billion U.S. Aid Talks
Context: Milei’s government pursues a stabilization package with Washington.
Insight: A textbook case of dependent development: external finance restores liquidity but constrains sovereignty. The negotiation revives debates on conditionality versus credibility in emerging-market macroeconomics.

3. Colombia’s Mercury Contamination Crisis
Context: The UN frames mercury pollution as a human-rights emergency.
Insight: This redefines environmental damage through Sen’s capability approach: rights violations erode human agency and long-term productivity. Policy moves from remediation to justice—an evolution toward eco-constitutionalism.

Number

🔢 This Week’s Number

 4.5 trillion

This figure represents the estimated exposure of U.S. and European banks to hedge funds, private credit groups and other non-bank financial institutions (NBFIs), as flagged by the International Monetary Fund in its October 2025 Global Financial Stability Report.

• It signals a major macro-financial vulnerability that undercuts the optimism around modest global-growth forecasts; while headline growth is hovering around 3.2 % for 2025, this large off-balance-sheet exposure suggests latent risks that could trigger a sharper slowdown.

• The figure emerges from the interplay of financial-instability theory and shadow-banking concerns — where non-bank actors acting outside regulated frameworks can transmit stress into the traditional banking system.

• By focusing on this number, we highlight how the policy challenge is not just about fiscal and trade stimulus anymore — it’s also about financial architecture and institutional credibility: policy expansion makes little sense if it coincides with rising systemic risk behind the scenes.

• It provides a sharp quantitative anchor for our global theme: states may have room to manoeuvre in terms of fiscal and industrial policy, but their room for error in the financial-stability domain is shrinking sharply.

Read more at the FT

🌍 Sub-Saharan Africa Focus

🇳🇬 Nigeria

• Trade Surplus Improves to 6% — Central Bank reports a 6% trade surplus as exports outpace imports, signalling a stabilising external sector.

• Inflation Slows for 6th Month — Inflation eased to around 18%, giving cautious optimism but real income growth remains weak.

🇿🇦 South Africa

• Push for Credit Ratings Transparency — At the G20, South Africa urged reforms to global ratings agencies to reduce bias against developing economies.

• Agriculture: Crops Recover, Livestock Suffers — Strong crop yields contrast with livestock losses due to persistent foot-and-mouth disease.

🇳🇦 Namibia

• Eurobond Fully Financed — Namibia has secured funds to redeem its $750 million Eurobond, but reserves are expected to fall.

• Women & Child Health Strategy Launched — Government launches new national strategies to improve maternal, child and adolescent health outcomes.

🇰🇪 Kenya

• Boosting Exports to Türkiye — Kenya plans to increase grain and beef exports as part of a broader agricultural trade expansion strategy.

• Jambojet Expands Fleet — Kenyan airline Jambojet to acquire its 10th aircraft by November to meet rising domestic air travel demand.

🇿🇲 Zambia

• Ilute Solar PV Project Approved — Zambia signs a contract for the Ilute solar power plant, advancing its renewable energy agenda.

• World Cup Spot Secured — Zambia qualifies for the 2026 FIFA World Cup — a boost to national morale and regional soft power.

🇪🇹 Ethiopia

• Debt-for-Development Talks — Ethiopia is exploring debt swaps with the World Bank to channel repayments into health and education.

🇦🇴 Angola

• Debt Swap with World Bank by June — Angola targets mid-2026 to complete a debt-for-development swap aimed at improving social sectors.

🇲🇱 Mali Removes French Revolution from School Curriculum

• Mali’s government has officially removed the 1789 French Revolution from the ninth-grade curriculum.The Ministry of National Education says the decision is part of a wider reform to redesign school programs so they prioritise Mali’s own history, culture, and identity. This shift is seen as a deliberate move toward decolonising education—placing African perspectives at the centre of learning and allowing students to study global events through a lens rooted in their own heritage and experience.

Goodreads

📖 This Week’s interesting articles

• Have countries really felt the full effect of tariffs ?

  • In a letter to the Washington Post, Donald Bourdreaux, argues that while economists’ dramatic short-term predictions about tariffs didn’t fully materialise, the core warnings still hold: tariffs distort resource allocation and suppress long-run growth, potentially lowering incomes significantly by 2035.

  • The Politico is reporting that the ECB President, Christine Lagarde, thinks that although many tariff effects are still being absorbed by firms, the full cost may yet hit consumers — signalling latent risk in global trade and manufacturing sectors. She frames tariffs and rapid shifts like AI adoption as dual forces reshaping the global economy.

Gaming Oligopolies ?

📖 The High Cost of Consolidation: Activision Deal Hurts Gamers and Developers Alike

Former FTC chair Lina Khan has declared vindication over her opposition to Microsoft’s 2023 acquisition of Activision Blizzard. In a social-media post, she argues that the deal has led to “significant price hikes and layoffs,” a scenario her agency feared when it challenged the merger.

Since the acquisition, Microsoft has initiated multiple rounds of job cuts — including 9,000 employees in mid-2025 — and raised subscription pricing for its Game Pass service, following a prior increase in July 2024.

Khan says this sequence epitomizes the competitive risk posed by dominant firms: they can absorb market share and raise prices without fear of consumer backlash. Microsoft, by contrast, had argued the acquisition would boost consumer choice and competition.

The PC Gamer frames the merger as reinforcing consolidation in the gaming industry, with adverse implications for both game-players (through higher costs) and developers (via job losses). The publication thinks this is an example of a cautionary policy case for regulators: consolidation may undermine innovation, elevate consumer prices and reduce developer welfare — outcomes that antitrust scrutiny is meant to prevent.

The Week Ahead

• Fourth Plenum of the 20th CPC Central Committee (China, 20–23 Oct) — China’s party leadership meets to map out its 15th Five-Year Plan. Expect major signals on industrial strategy, tech sovereignty and debt management.

• US Economic Data Releases (24 Oct) — The delayed US Consumer Price Index and other inflation indicators drop amid government-shutdown risk. Vital reading for global monetary-policy watchers.

• World in Progress Forum (Barcelona, 20–21 Oct) — Global leaders meet to discuss governance, climate-finance and digital AI regulation — a policy pivot forum ahead of COP30.