The global implications of rising interest rates
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I have said it before and I will say it again: The continuing rise in interest rates will have negative implications that transcend the borders of the US and have an influence on the entire world. This exceptional rise in interest rates, which has not been seen on the global stage in more than two decades, has become a significant concern in recent years, especially given its far-reaching consequences for governments, businesses and even individuals. Because it is armed with a strong shield, the US dollar.
And, while the global economy is forced to adjust to America’s actions, the US dollar’s supremacy has a direct impact on it. Even countries that have a strong and independent economy and have no interest in the dollar will be affected, and they will be forced to follow the example of the dollar because of its supremacy as a worldwide currency.
This growing trend of interest rate rises has global and local implications for businesses, investments and economies. If it is not contained, it has the potential to exacerbate the discrepancies between global economies and extend the economic gaps between countries, as if it were a vicious spiral that only leads to economic crises. The impact of increased interest rates on the corporate world is evident, as higher borrowing costs lower capital expenditures, stifling growth and impeding expansion plans. Similarly, the investment landscape becomes harder when high interest rates restrict capital flows and investor confidence.
No area of the economy will be spared from the negative effects of the dollar’s supremacy, including real estate, manufacturing, consumer goods and other industries that will bear the brunt of this interest rate growth. Here, I emphasize the importance of addressing this issue on a worldwide scale through international cooperation.
It is no secret that the US’ decisions are merely reactions to internal problems. When making decisions that influence the entire planet from north to south, they do not think beyond their territorial limits. The dollar’s supremacy as a worldwide reserve currency forces other countries to follow their lead, meaning they are driven to boost interest rates in response to fluctuations in the US dollar.
It is evident that the US is more preoccupied with internal difficulties than with the long-term repercussions of its financial policies.
Khalaf Ahmad Al-Habtoor
As an example of how the US’ decisions affect the global economy as a whole, we see emerging or developing countries being affected by the rise in interest rates, with their economies almost completely paralyzed even though they are thousands of kilometers away from America. High interest rates raise borrowing costs for businesses, governments and even individuals, limiting chances for growth and development, as well as decreasing investor appetite for those countries and affecting the value of their national currencies. As a result, national products and services lose competitiveness in foreign marketplaces, meaning their investment prospects will dwindle and job opportunities vanish.
Despite this, it is evident that the US is more preoccupied with internal difficulties than with the long-term repercussions of its financial policies on the global economy. As a result, we must work together to discover a means to liberate ourselves from the shackles that bind our economies, and this begins with the united effort of all countries, regardless of their economic condition. Ignoring these concerns leads to a shaky global economy by any measure.
In conclusion, I urge decision-makers and world leaders to act before the ax falls and to collaborate to coordinate their monetary policies and implement strategies to avoid an exacerbation of the situation, ensuring that no further harm is done to the global economy. The only way to support economic sustainability and global stability is to achieve this balance.
• Khalaf Ahmad Al-Habtoor is a prominent UAE businessman and public figure. He is renowned for his views on international political affairs, his philanthropic activity, and his efforts to promote peace. He has long acted as an unofficial ambassador for his country abroad.
