In the face of declining global growth, protect and invest in civil societyMason Ingram · September 15, 2023
With global markets struggling to recover from pandemic- and war-induced supply shocks and inflation, the present economic moment is one of instability and uncertainty. The risk of a worldwide recession may have receded but medium-term risks to the global economy abound. They include the collapse of the Ukraine grain deal, slackening demand from China, the cumulative toll of high interest rates, and high public debt burdens. These and other factors led the IMF recently to issue its lowest five-year projection of global growth in three decades.
In this uncertain environment, multilateral financial institutions, central banks, and other policymakers are justifiably focused on the macroeconomic policies that can help nations weather the impact of protracted below-average growth. Parallel attention, however, should be granted to the effects of slow growth on key social and civic institutions, namely civil society, whose role in contributing to socioeconomic and political stability is heightened during a time of extended economic malaise.
Civil society refers to the associational structures that sit outside of the state, market, and family and the full spectrum of civil society actors includes institutionalized civil society organizations (CSOs) and informal community-based structures and social movements. Civil society’s stabilizing influence during periods of socioeconomic stress stems from its dual role as a provider of essential social support and enabler of civic action. During the 2008 global financial crisis, for example, CSOs responded to broad increases in demand for their services as they moved to fill gaps left behind by governments and markets. More recently, civic actors of all stripes delivered essential services and fostered social cooperation during the Covid-19 pandemic. CSOs were on the frontlines delivering health services and social assistance, while diverse civic activists organized self-help initiatives and mobilized to address rapidly emerging economic challenges.
An extended period of depressed growth may have a slower burn than the global financial crisis or Covid-19, but the demands on civil society could be similar as countries grapple with continued supply shocks, fluctuating food prices, and the impacts of fiscal austerity. Meanwhile, as demand for services from civil society increases, slow global growth could hinder its ability to mobilize financial resources from both domestic and international sources. A UN study, for example, found that the financial crisis negatively impacted the finances of CSOs across most regions, hitting organizations with the least diversified funding bases in resource poor regions especially hard.
Civil society is also an essential conduit of public grievance. One analysis of protest movements in the late 2000s and early 2010s found that negative socioeconomic conditions can provide a short-term trigger for political uprisings, even if they often play a secondary role to political factors such as a rigged election or state repression. In healthy civic environments, formal CSOs and informal social movements can mobilize public sentiment to turn political crises into opportunities for change. Civil society can often leverage years of advocacy on issues and policies tied to the crisis at hand and can remain engaged during the long, winding and distinctly unsexy reform processes that follow.
Sri Lanka provides a recent and dramatic example of how economic factors can serve as catalysts of civil society-led mass mobilization. The Aragalaya protests, which began in May 2022, were precipitated by a deepening economic crisis hitting all segments of society. By summer, the government had defaulted on its debt, inflation had reached 51.6%, and Sri Lankans faced severe shortages of essential goods. These conditions, combined with resentment over economic mismanagement and kleptocracy, contributed to mass protests and the ouster of President Gotabaya Rajapaksa by July 2022. The protests, however, built upon the longer-term mobilization efforts of diverse civic leaders. And more than a year after the protests, formal and informal civil society continues to push for widely sought reforms, such as strengthened mechanisms for recovering stolen assets and restructuring of state-owned enterprises.
Sri Lanka is unique, but any extended economic slowdown will create opportunities for similar crises. Those conditions, however, will coincide with another global trend: closing civic space. Indices from Freedom House, V-Dem and CIVICUS show a generational erosion of democratic rights. This trend includes the spread of restrictive regulations on civil society, the expansion of state surveillance regimes, and the curtailment of the rights of assembly and speech. These and other restrictions are a direct assault on civil society’s ability to openly channel citizen demands to advance accountable governance. They also, however, threaten the ability of CSOs to meet the socio-economic needs of at-risk communities.
Worryingly, if slower growth causes authoritarian and democratically backsliding regimes to feel less secure, it could drive future clampdowns on civil society. We have seen this scenario play out recently as Covid-19 pandemic restrictions were used as an excuse to curtail fundamental civic freedoms and limit the activities of CSOs and social movements.
Those responsible for heading off and ensuring resilience in the face of depressed economic growth should be concerned for the health of civil society. Academics and supporters of civil society should track the financial impact of emerging economic conditions on civic actors, especially in countries with growth below the mean of whatever global economy emerges. International donors should maintain or deepen their support to civil society, especially if domestic revenue generation for CSOs slackens, and especially in countries where civil society is under threat.
Institutions like multilateral development banks, which have historically viewed civil society as beyond their sphere of concern, should view civic space as critical to near- and long-term socioeconomic and political security. Notably, the IMF conducted a novel in-depth governance assessment focused on corruption risks prior to issuing a widely anticipated bailout package for Sri Lanka. This and other tools could be extended to evaluate the civic health of target countries. As they increase attention to governance and anticorruption issues, the IMF, World Bank and other multilateral institutions should prioritize policies and investments that strengthen and protect civil society, especially as they work to stabilize countries during periods of economic stress.