The end of globalisation, 1989-2022

Western sanctions on Russia have killed globalisation

While sanctions might have hurt the Russian economy more than even Washington expected, their unintended consequences are terrible for the world economy. I had pointed this out in my early March column.

The realisation of their global and historical impact is now dawning.

“The Russian invasion of Ukraine has put an end to the globalisation we have experienced over the last three decades,” Larry Fink, chief executive of BlackRock, the world’s largest asset manager, wrote in his annual letter to shareholders this week. “A large-scale reorientation of supply chains will inherently be inflationary,” he added.

Fink is not alone in raising this issue in recent days. Howard Marks, co-founder of distressed debt investor Oaktree Capital Management, also warned in a Financial Times opinion article this week that the pendulum of globalisation is swinging back towards local sourcing.
Offshoring “makes countries and companies dependent on their positive relations with foreign nations and the efficiency of our transportation system”, he said. Financial Times

Beyond inflation, deglobalisation will lead to smaller balance sheets, lower profits and lower prosperity all round.

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