2025/03/06 - GLOBAL INSIGHT - The World Situation

Welcome to this month's edition of GLOBAL INSIGHT, your comprehensive overview of key developments worldwide. In this issue, we analyze the economic situation, geopolitical tensions, technological innovations, climate change and provide an outlook for the next four years.

Economy: Uncertainties, recessions and new opportunities

The world economy is at a critical juncture. While some regions are recovering from the aftermath of the pandemic and geopolitical conflicts, others are facing significant challenges.

Global economy: growth with obstacles:

According to the International Monetary Fund (IMF), global economic growth for 2025 is estimated at around 3.2% - with significant regional differences.China, once a growth engine, is struggling with a severe real estate and debt crisis. The hoped-for recovery has not materialized, and a prolonged period of stagnation cannot be ruled out.

Europe, especially Germany, continues to see weak growth. The German economy will remain the laggard of the G7, with projected growth of just 0.8% in 2025.The US is proving resilient, driven by a (still) robust labor market and continued investment in technology and infrastructure.

Inflation and interest rate policy: Will money remain expensive?

• Inflation rates have stabilized after the extreme increases of recent years, but structural factors such as deglobalization, climate protection measures and an aging society will keep inflation high in the long term.
• Central banks around the world face a dilemma: lowering interest rates to stimulate growth or keeping interest rates high to control inflation?

New economic power blocs: the BRICS alliance is growing stronger:

• The BRICS group (Brazil, Russia, India, China, South Africa) has increased its geopolitical importance enormously by admitting Egypt, Ethiopia, Iran and the United Arab Emirates.
• These states, which represent almost half of the world's population, are seeking to move away from the US dollar in world trade.

Geopolitics: A new era of conflict?

The war in Ukraine and its consequences:

• The war in Ukraine continues, and a diplomatic solution still seems a long way off.
• The economic sanctions against Russia have consequences worldwide, particularly for energy and commodity markets.

USA under President Trump - realignment and international tensions

Since President Donald Trump's re-inauguration on January 20, 2025, the United States has seen a number of significant political changes affecting both domestic and foreign policy.

Domestic policy measures:

• English as official language: Trump issued a presidential decree declaring English the official language of the USA. Federal agencies are no longer required to provide services in other languages, which is seen as a step towards strengthening national cohesion.?
• Administrative reforms: The Department of Veterans Affairs plans to cut about 80,000 jobs to increase efficiency and reduce bureaucracy. This measure is being carried out in collaboration with the Department of Government Efficiency (DOGE) founded by Elon Musk.?

Foreign policy developments:

• Ukraine conflict: In his latest address to Congress, Trump emphasized his efforts to end the Russia-Ukraine war. He also announced plans to expand the production of critical minerals and rare earths in the US.?
• Middle East policy: Trump issued sharp warnings to Hamas and demanded the release of all Israeli hostages. He emphasized the U.S.'s unwavering support for Israel and threatened to eliminate Hamas if its demands were not met.?

International economic relations:

Trade partnerships: Together with British Prime Minister Keir Starmer, Trump is working on a new economic agreement that puts advanced technologies such as artificial intelligence at its center. Both emphasized the importance of embracing the opportunities of these technologies rather than over-regulating them.?

Reactions and challenges:

Trump's domestic policy decisions have met with mixed reactions. While some welcome his measures as a necessary step to strengthen national cohesion, others criticize them as potentially discriminatory against non-English-speaking communities.

In foreign policy, Trump's decisions are causing tensions. His stance on the Ukraine conflict and the threats against Hamas are being closely monitored internationally, triggering both support and concern.

Tensions in Asia: Taiwan in focus

Relations between China and Taiwan remain tense. An escalation could destabilize the entire Asian region and have massive economic consequences.

Middle East: More conflict than peace

The conflicts between Israel and Palestine, as well as Iran's growing role as a regional power, keep the region in a permanent state of tension.

Climate change: Disasters are increasing - solutions are not materializing

Extreme weather events are becoming more frequent:

• 2024 was one of the hottest years on record.
• Floods, heat waves and forest fires have caused massive damage in many parts of the world.

Climate protection is lagging behind:

• Despite all the international agreements and measures, global CO? emissions have continued to rise.
• Investments in renewable energies must triple in the next few years to achieve the climate targets.

Technology: The future will arrive sooner than we think

Artificial intelligence is revolutionizing the economy and society:

Generative AI is already changing many industries, from medicine to education and finance.Regulators around the world are discussing the ethical and social implications of AI technologies.

Space travel: a new race is beginning:

• Privatized space companies such as SpaceX and Blue Origin are driving the expansion into space.
• The first missions to Mars are planned for the 2030s, while the moon is to serve as an intermediate stop in the next few years.

Quantum computers are on the verge of a breakthrough:

Companies such as Google, IBM and Chinese start-ups are on the verge of making quantum computers suitable for everyday use, which could trigger a technological revolution.

Society: Global challenges and social upheaval

Migration pressure is increasing:

• In the coming decades, climate and economic migration will force millions of people worldwide to flee.
• European states continue to struggle to agree on a common migration policy.

Demographic change: A shrinking West?

• While African and Asian countries have growing populations, Europe is experiencing a rapid aging of its population.
• The consequences are serious: a shortage of skilled workers, rising healthcare costs and changing social structures.

Outlook: What can we expect in the next four years?

Economy: Stagnation or recovery?

• The US and Asia could drive growth, while Europe continues to struggle with structural problems.
• Increasing investment in AI, space travel and renewable energies could open up new markets.

Geopolitics: Danger of new conflicts

• Tensions between China and Taiwan could escalate.
• Russia and the West remain geopolitical antagonists, while the BRICS countries strive for a new world order.

Climate crisis: The race against time

• Without drastic changes, the next 2.0-degree target will also no longer be achievable.
• New technologies could help, but they may come too late.

Society and technology: A revolution is imminent

• Artificial intelligence and automation will profoundly change labor markets.
• Demographic changes and migration will dominate political debates.

A world in transition

The next four years will be characterized by uncertainties, upheavals and technological revolutions. While geopolitical tensions will remain, technological progress offers opportunities for a more sustainable and efficient world.

Stay tuned for my next edition of GLOBAL INSIGHT - The World Situation.