At Warwick Economics Summit, Nathan Sheets maps the anatomy of an unexpectedly resilient world economy

Dr Nathan Sheets speaks at a keynote address at the Warwick Economics Summit

This article was written by Dheer Chawla a student at the University of Warwick. This article is part of his column 'Behind the Headlines'.

The modern global economy, Nathan Sheets suggested at the Warwick Economics Summit, is defying not merely forecasts but the very historical logic upon which those forecasts are typically built. Addressing a packed hall, the global chief economist of Citigroup framed his remarks around what he characterised as the defining macroeconomic puzzle of the present era: an international system repeatedly struck by shocks of exceptional magnitude, yet refusing to fracture in the expected ways.

“If there's any key message or any key takeaway I want you to have for my remarks this morning, it is that we are seeing a very resilient global economy,” he said.

What lends this resilience its intellectual intrigue is the severity of the disturbances the economy has recently endured. A major land war in Europe, the sharpest global tightening of monetary policy in decades, escalating trade fragmentation, and the aftershocks of a pandemic that paralysed production and mobility would, in earlier cycles, have posed a serious risk of synchronised contraction.

Instead, global output has advanced with almost disconcerting steadiness. “Over the last 4 years, global growth has been right at its trend rate, around 3%. Global growth has been pretty stable,” Sheets noted, underscoring the extent to which realised outcomes have diverged from widespread recessionary expectations.

This apparent stability, however, does not reflect the absence of stress but rather the emergence of new ‘adaptive capacities’ embedded within the global economic system. Sheets located the origins of this transformation in the technological reconfiguration of firms themselves. Digitalisation, along with real-time information flows and vastly enhanced logistical coordination, has endowed corporations with an unprecedented ability to reorient production in response to disruption.

“Firms have been able to adjust sourcing and supply chains, where they get commodities… anywhere in the world in real time,” he said. In effect, supply chains have evolved from rigid pipelines into flexible networks, capable of rerouting around geopolitical and economic obstacles with remarkable speed.

The restructuring of global trade in response to rising protectionism offers a particularly vivid illustration. Tariffs imposed by the United States were widely expected to inflict damage on global commerce. Instead, trade patterns reconstituted themselves with surprising fluidity.

“Have these tariffs triggered a meaningful rewiring and adjustment in U.S. trade? Absolutely,” Sheets observed. Chinese exports, rather than collapsing, were redirected towards alternative markets, while other economies expanded their share of U.S. imports. The result was not the disintegration of globalisation, but its quiet reconfiguration, a shift in geography rather than a contraction in scale.

This capacity for adjustment has helped produce what Sheets described as a finely balanced macroeconomic environment. “On the one hand, we feel fairly sanguine, and I've called this outlook Goldilocks, not too hot, not too cold,” he said.

Inflation, which surged to multi-decade highs in the aftermath of the pandemic, has moderated significantly, allowing some central banks to ease the restrictive policies that had been necessary to restore price stability. Yet this equilibrium remains delicate, sustained as much by favourable structural forces as by careful policy management.

Beneath the surface, Sheets identified vulnerabilities that, while less immediate, carry potentially profound long-term implications. Chief among them is the extraordinary expansion of public debt across advanced economies (a legacy of pandemic-era fiscal intervention and policy responses). The scale of sovereign borrowing, he suggested, will require financial markets to absorb vast quantities of government issuance in the years ahead, which raises questions about future interest rates, fiscal flexibility, and the resilience of public finances.

Within this broader global context, the United States occupies a position of unusual dynamism. Its growth in recent years has been propelled in part by an extraordinary surge in investment linked to artificial intelligence, a technological frontier that Sheets regards as transformative. “I'm a true believer in AI,” he said, placing it in the lineage of general-purpose technologies that fundamentally reshape economic potential.

The implications extend beyond individual firms or sectors. “Higher productivity is as close a thing as there is in economics to a free lunch,” he remarked.

Yet even here, Sheets counselled caution. Much of AI’s current economic impact reflects heavy investment, with the full productivity gains yet to materialise. The transition from technological promise to measurable productivity, he implied, is rarely immediate. It requires organisational change, experimentation, and time.

What ultimately emerged from Sheets’ remarks was not a portrait of an invulnerable global economy, but of one that has undergone a subtle yet profound structural evolution. Its resilience is not rooted in the absence of shocks, but in its enhanced capacity to absorb, redistribute, and adapt to them. The present-day economy, in this sense, is less brittle than its predecessors, more technologically enabled, and more fluid in its responses.

“The last few years have been challenging. They’ve been difficult. But nevertheless, the global economy has been able to respond effectively and grow

at a solid pace,” Sheets reflected.

In that observation lies a deeper implication. The defining feature of the current economic era may not be ‘stability’ in the traditional sense, but ‘adaptability’: an economy in continuous motion, reshaping itself in response to forces that would once have probably brought it to a halt.

The views and opinions expressed in this article belong solely to the writer and do not necessarily reflect the views and opinions of the Warwick Economics Summit.