Despite being buffeted by ever-changing trade wars, shortages of key minerals and tense standoffs between the United States and China, the global economy has proven more resilient than expected.
But don't think it's time to take a breather. The vortex shows no signs of stopping.
“We are living through a uniquely turbulent time,” said Daron Acemoglu, an economist at MIT who won the Nobel Prize in economics last year.
Transformational changes continue to disrupt the global economy, including the artificial intelligence revolution, rapidly aging populations, climate change and a global shift away from liberal democracy and a rules-based international order.
They are all ready to reshape jobs, politics and lives.
The transition has been complicated this year by chaotic economic policies around the world.
In the United States, the Oval Office regularly makes contradictory statements as tariffs are imposed and withdrawn without warning. Last month, for example, President Trump lifted tariffs on beef, tomatoes, bananas, coffee and other foods, while last week he threatened to increase them on rice from India and China.
Delayed price increases from tariffs are still working their way through the American economy like a mouse being digested by a snake.
At the same time, the future of much of the president's tariff policy remains unclear until the Supreme Court rules on its constitutionality.
On the spending side, Mr. Trump has vowed to use a $250 billion pot of money generated by tariffs to pay out trillions of dollars to farmers, taxpayers and creditors. Public debt has risen to record levels, reaching 125 percent of the country's total production.
And the stock market's dizzying rise, driven by artificial intelligence companies, is fueling both happiness and fear of a future crash.
In Europe, most countries continue to suffer from slower growth than other advanced economies. The European Union's share of the global economy has been shrinking for several years due to increasing competition from the USA and China.
Investments in artificial intelligence have also fallen far behind.
“Europe has a huge innovation problem in the technology sector,” said Mr. Acemoglu, who won his Nobel Prize for research on how institutions shape national prosperity.
With 27 members with different priorities and domestic pressures, the European Union is facing enormous difficulties in implementing key policy recommendations such as strengthening its internal market for trade and capital, streamlining regulations and signing new trade agreements. This week, for example, the bloc delayed a vote on whether to adopt a trade deal with Argentina, Brazil, Paraguay and Uruguay that has been in the works for decades.
Producers and manufacturers are being held back by high energy prices and face growing competition from cheap Chinese exports that would have been aimed at the United States before Trump's tariffs.
Security threats are forcing European governments to further strain their budgets and take on even greater debt as they allocate significantly more resources to military spending.
The war in Ukraine continues, and Russian President Vladimir V. Putin has shown little sign of curbing his aggressive stance. Mr. Trump continues to weaken America's commitment to the Atlantic Alliance. A recent analysis by Danish intelligence warned that the United States “no longer rules out the use of military force, including against allies.”
On the other side of the world, China is still suffering from a collapse in its real estate market and a decline in real estate, infrastructure and manufacturing investment.
However, China's economic influence is increasing. A record $1 trillion global trade surplus shows that Mr. Trump's tariffs have done little to curb the country's trade dominance or its reliance on exports to boost its economy. The International Monetary Fund recently raised the country's annual growth forecast to up to 5 percent.
“These imbalances are becoming unbearable,” French President Emmanuel Macron said during a visit to China this month.
Europe is not the only destination for the growing tide of Chinese exports. Southeast Asia is one of the regions that recorded the largest increase.
Dani Rodrik, an economist at Harvard University, said the West's “response to China's manufacturing onslaught is misguided and ineffective.” Chinese innovations have led to significant climate and energy advances that benefit the entire world, he said, adding: “Instead of a blanket condemnation of Chinese mercantilism, the West needs a more nuanced strategy.”
He suggested focusing on the next generation of technology rather than trying to emulate what China has already done.
China offers considerable competition to the USA in the field of artificial intelligence. MIT's Mr. Acemoglu said China has an advantage over the United States when it comes to the number of well-trained engineers.
The replacement of the long-standing trade order, in which the United States is clearly at the forefront and leading the way, also creates new uncertainties and costs for the global economy.
“We are certainly in a limbo where there is no hegemon and countries feel more entitled to go their own way,” said Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics.
As ad hoc bilateral trade agreements become more numerous, companies will also need to be more concerned about the provenance of their materials and consider increasing compliance costs and additional documentation requirements. “It’s a much more creaky trading system than what we’re used to,” Obstfeld said.
Diane Coyle, an economist at the University of Cambridge, pointed out that the Covid-19 pandemic and its consequences had exposed unforeseen vulnerabilities in the global supply chain. “I think we still don’t have a detailed view of the global and national production networks and where these bottlenecks are” or where they will emerge if a new crisis occurs, she said.
Political currents could lead to further instability in the global economy.
“Many people in many countries feel that their lives are declining,” Ms. Coyle said, and distrust of government is increasing.
Elections in several countries next year could change politics. The midterm congressional elections in the United States, which could serve as a referendum on Mr Trump's economic agenda, are likely to prompt the government to increase government spending – and the deficit – to stimulate the economy.
Sweden's general election will reveal how some of Europe's right-wing populist parties are faring and test the electoral system's vulnerability to disinformation campaigns from abroad. In Brazil, Latin America's largest economy, where Mr. Trump has used tariffs to try to influence domestic politics and court decisions, President Luiz Inácio Lula da Silva will face a far-right populist challenger.
A group of outside advisers to the global financial system's two stewards, the World Bank and the International Monetary Fund, have captured that sense of confusion – and perhaps even fear – in a new analysis of the future of the global economy and the role of institutions within it.
They introduced the report with a quote based on the 1929 writings of political philosopher Antonio Gramsci: “The old world is dying, and the new world is struggling to be born; now is the time of monsters.”