The Global Economy: A Rollercoaster Ride and What Lies Ahead

A Year of Challenges and Growth

The year 2025 was a whirlwind for the global economy. The U.S. government shook things up by challenging old economic beliefs. They put up tariffs, questioned the Federal Reserve's independence, and ignored international institutions. Meanwhile, debt kept climbing. On top of that, the world faced geopolitical crises and a surge in AI investments that seemed to ignore financial risks. Yet, against all odds, the American and global economies grew strongly, and stock markets hit record highs.

Looking Ahead to 2026

Looking ahead to 2026, things might not be so smooth. To keep the good times rolling, both governments and businesses need to make smarter choices. They should focus on real fixes, not just quick money patches or tariffs.

Economic Resilience

The U.S. economy defied expectations. Despite trade tensions and protectionist policies, it grew at a solid pace. The global economy also showed resilience, growing at a steady rate. China, in particular, adapted quickly to U.S. trade barriers by finding new markets. It even achieved a record trade surplus.

The AI Boom

AI companies were the darlings of the stock market. Their valuations soared, driving big gains in major indexes. Nvidia became the world's first $5 trillion company, and OpenAI struck a massive deal with Disney. Investors seemed to have unlimited funds for AI, even for companies with shaky business models. The market also kept funding huge debts and deficits in advanced economies. Surprisingly, interest rates ended the year lower, easing concerns about a debt crisis.