The world is slowing down 🌍
Five years into the pandemic, the global economy is still moving at an alarming pace.
The International Monetary Fund expects growth to fall from 3.3% in 2024 to 3.2% in 2025, reaching 3.1% in 2026 - a decline that appears to be not temporary but a deep structural shift that is redrawing the map of the global economy.
Trade wars reshape the landscape 💼
Tensions between the US and China have flared up, and the number of trade protectionist measures has jumped to more than 3,000 per year since 2019.
As a result, the World Trade Organization predicts that merchandise trade growth will not exceed 2.6% in 2024 and 0.5% in 2026-roughly half of historical averages.
Public debt...ballooning without a ceiling 💸
Global debt has reached $336 trillion, or 307% of global output.
Developing countries paid more than $443 billion in 2022 to pay interest and installments - up 5% from the previous year, with a further 39% rise expected through 2024.
A new decade of austerity is on the horizon.
️ Declining productivity and value chains ⚙
Since the 2008 financial crisis, overall productivity growth has fallen by 50%, and the efficiency of major economies has been eroded by the disintegration of global supply chains as countries relocalize industries to reduce overseas dependence, raising costs while lowering efficiency.
Interest rates... a double-edged sword 🏦
In an attempt to curb inflation, central banks have raised interest rates to their highest levels in two decades, reaching 5.5% in the US and 4% in Europe, but these policies designed to save the economy have backfired, suppressing investment and weakening demand, making the "cure part of the disease."
Green Transformation: High Cost, Long Way to Go 🔋
The world needs to invest $4.5 trillion a year in clean energy by 2030, while high metal prices for metals such as lithium and cobalt are delaying the environmental transition, despite its future importance.
️ Global Crossroads ⚖
The world today faces two choices:
Bold structural reforms that restore confidence and balance.
or a long decade of stagnation similar to Japan's "lost decade" of the 1990s.
Innovation or stagnation...this is the critical economic question for 2025.
To read the full analytical paper, please scroll down.
Comments