As we step into early December 2024, it feels like the end of a truly eventful year. On a personal note, it hasn’t been the smoothest journey—but I’ve already shared much of that story. Now, I find myself in the “Here Comes the Sun” phase. There’s hope, as there always is—because no matter what, it will always be 11 AM somewhere tomorrow.
The world is brimming with serious challenges, and it’s hard
to know where to begin unraveling them. To stay grounded, I’ve decided to focus
on countries I have visited/worked with frequently and I’m reasonably familiar
with, emphasizing the “big picture” and the macroeconomic trends. So, let’s
take a step back and explore some of these overarching themes from a high-level
perspective.
Europe
·
The EU: elections in June with a marginal
victory for the ruling coalition and their President Ursala Von der Leyen. The
outlook is problematic, Europe remains very fragmented. There is low
productivity and innovation leading to an incapable position to compete with the USA and China. A lingering
and complex immigration crises, an even tinner agenda and budget to put
effective means in place for the climate crises. The EU seems also a very
costly and inefficiently run mega organization with limited check and balances
policies! Unfortunately, Europe’s governing politicians are unable to generate
a consensus on how to pay for existing and future spending. Across Europe,
political fragmentation is leading to unstable governments, either because it
creates scrappy coalitions, as in Germany or the Netherlands, or minority
governments like France’s or Spain’s. Their weakness infects the EU as
a whole, because without leadership from France and Germany nothing ambitious
can happen in Brussels.
·
Germany: the engine of Europe’s and its
largest economy has becoming a drag since Covid. industrial production has
struggled in recent years. Energy-intensive industries, such as chemicals,
metal-work, automotive and paper manufacturing, have been hit particularly hard
with tens of thousands of jobs at stake. There is a crises in the government
with elections scheduled for Feb 2024. Attention: serious growth of the radical
right.
·
France: a complex government structure, gridlock:
no budget no government, the RN party in danger due to financial campaign fraud.
An unpopular president and most importantly an astonishing budget overspending
where budget cuts will put people on the streets and strike. Spending in the public
sector is simply unattainable. Its ratio of public debt to GDP has
risen from 66% two decades ago to 112% now, and it is running a fiscal deficit
of over 6% of GDP which its central bank expects to come down only
slowly. Is this country “Too Big To Fail”, a comparison to the financial
crises in 2008 where the same was said about the very large financial institutions?
Attention: an important radical right.
·
United Kingdom: After 10 sluggish years
there are more people living in poverty than in the last 40 years, high
unemployment numbers, a complete non-functioning healthcare system, none of the
Brexit promises are being materialized. Despite all of this inflation is back
near its 2% target. Growth picked up slightly in 2024, and forecasts became
steadily more optimistic. The current Labor government with its leader Keir
Starmer has a difficult time making any impact. Serious sacrifices to be
expected by its population.
·
The Netherlands: an economy that’s running
more or less smooth yet inflation is around the corner again. The basis (still)
seems to be ok. A radical right party in the lead of a coalition cabinet is
struggling, mainly due to incompetence of the team, no clear direction of the
PM and the ever presence “Polder” mentality, juiced with lots of protests. Immigration
and agriculture are major topics. Hardly any decisions are being made, on all
levels.
USA
·
The elections of November I have tackled a few
weeks ago, what we can say 4 weeks after is that the nominations for the top echelons
of Trump 2 is….what to say. Loyalists over meritocracy, extremists,
billionaires. About Elon Musk: his support for Trump and participation of the
DOGE is purely strategic for himself, why 1) he can obtain billions of dollars
from contracts of the government and 2) his goal is to become a recognized global
leader. Tariffs seems to be the new buzzword, trade wars with China, Europe,
Canada, and Mexico. Ultimately the American middle and lower class will suffer
most from these potential trade wars and the deportation of millions illegal
immigrants (read workers!). It seems that the era of incompetence and
corruption will be in the White House and the Hill with serious consequences
for Americans and the rest of the world!
South America
·
Brazil: The population is ageing and the pension
bill, already 44% of federal spending, will rise further. Productivity is
stagnant, education deficient and infrastructure mwah. Lula’s government
is spending lavishly and he often seems reluctant to rein that in. He has been
meddling in state-controlled companies. This is pushing up the public
debt, which has risen from 60% of GDP in 2011 to 85% today and may
reach 95% by 2029.
·
Argentina: reforms aimed at shaking
Argentina out of decades of humiliating decline caused by rampant inflation,
absurd handouts and thickets of regulation. The result has been better than
almost anyone expected: inflation is down sharply, government spending is almost
30% lower in real terms. Despite huge spending cuts, President Milei is
more popular with Argentines than his two predecessors were after their first
year. It has long been their scourge, fueled by wild government overspending
financed by printing money. When Mr. Milei took office inflation was running at
13% month on month. It spiked to 25% after he devalued the artificially and
unsustainably strong peso. It is now under 3% per month.
· Japan:
For much of the past three decades Japan’s economy has been defined by
deflation, stagnation and fading global relevance. That is no longer the case.
Between 1991 and 2021 Japan’s annual inflation rate averaged 0.35%. Inflation
has been above 2% every month since April 2022. In March the Bank of Japan for
the first time in 17 years, doing away with the world’s last experiment in
negative interest rates. Japan’s working-age population (now 74m) is projected
to shrink by 30m between 2020 and 2070. For all Japan’s improvements, its
potential growth rate is still below 1%.
·
India: Narendra Modi, the prime minister,
was typically bullish about his country’s prospects. The world, he suggested,
is living through an “Indian era”. Rapid growth, favorable demography and an
emerging tech industry have put the country at a “sweet spot”. After roaring
growth in recent years, the economy seems to be losing momentum. The
annual GDP growth rate eased to 6.7% between April and June, down
from 7.8% in the previous quarter. That is the slowest expansion in more than a
year. There might be loom over the economy: weak private investment, stagnant
manufacturing and falling real wages. Is India slowing down?
The Wars
· Ukraine and Russia: For over 1000 days Ukraine and Russia are at war after Russia invaded Kiev. There is declining support from Ukraine’s allies in money and weapons, and Russians being supported by North Korean soldiers and soon by the newly elected President in the USA. Membership of NATO, and enhanced collaboration with EU Countries and the UK seems further away for Ukraine. As of late 2024, the ongoing war in Ukraine has led to staggering human and economic costs. The conflict, which began with Russia's full-scale invasion on February 24, 2022, has resulted in approximately 1 million deaths. It has displaced over 10 million people, with around 6.7 million Ukrainians seeking refuge abroad and many more internally displaced. About 40% of Ukraine's population now relies on humanitarian aid, highlighting the scale of the crisis. On the military side, Russia has reportedly suffered significant casualties, with estimates suggesting 315,000 killed or injured. Economically, Western sanctions have targeted Russia's economy, but adaptations and alternative trading relationships, particularly with China and India, have helped Russia mitigate the impact. Meanwhile, Ukraine relies heavily on international aid, with over €185 billion in support provided by the U.S., EU, and other allies. The conflict remains highly volatile and continues to reshape global geopolitics and humanitarian priorities.
·
Gaza: after the horrendous terrorism
attack by Hamas on Israel on October 7, 2023 the situation has only become more
complex with inclusion of Hezbollah, Houthis and countries such as Iran, Lebanon
and Syria. In the middle of this is Gaza, a tiny state occupied by Palestinians
where citizens have been deprived from life’s essentials such as water and
food, moreover thousands have been killed. The ongoing conflict between Hamas
and Israel, which escalated sharply after the October 7, 2023, attacks, has
resulted in significant casualties and displacement on both sides. Over 45,000
people have been killed, including approximately 43,972 Palestinians (primarily
in Gaza) and 1,706 Israelis, as of November 2024. Additionally, tens of
thousands have been injured—104,008 Palestinians and 5,431 Israelis, with
injuries sustained through bombings, rocket fire, and military actions. The
humanitarian crisis in Gaza is severe, with over 1.9 million of its 2.2 million
residents displaced. Shortages of essential supplies, compounded by
infrastructure damage and blockade restrictions, have exacerbated living
conditions. The crisis has led to further deaths due to starvation, disease,
and lack of medical care, with estimates exceeding 62,000 non-combatant
fatalities.
·
Soudan: Sudan is enduring a devastating
conflict that has drawn less global attention than the wars in Gaza and
Ukraine, despite being potentially deadlier. Approximately 150,000 people have
been killed, with mass graves visible from space, and over 10 million—a fifth
of the population—displaced. A looming famine could rival the catastrophic
Ethiopian famine of the 1980s, possibly claiming 2.5 million lives by year’s
end. The conflict is not only a humanitarian disaster but also a geopolitical
crisis. Sudan’s strategic location in Africa, proximity to the Red Sea, and
influence on neighboring countries make it a hub for instability. Foreign
powers, including Middle Eastern states and Russia, are fueling the conflict,
while Western nations remain disengaged and the UN is ineffective. (source: The
Economist)
Trends and Questions:
1. Global Fragmentation: A divided world grapples with Brexit, EU dynamics, Mercosur-Europe relations, and the influence of China and the USA. Key challenges include climate change, energy transition, trade, and immigration. Slowdown of globalisation?
2. Rise of Autocracy: The radical right gains momentum in the USA, Germany, France, Austria, Italy, the Netherlands, and Belgium. Leaders like a.o. Trump, Putin, Wilders, Meloni and Orbán drive governance failures, eroding decency, respect, and values. Media distortion, fake news, and corruption fuel cutthroat communication. Is democracy in danger?
3. Climate Crisis: Political focus and resource allocation for climate action remain inadequate. 2024, the hottest year on record, has seen unprecedented floods. Climate change still on top of the political and economical agenda?
4. International Collaboration : Trust and impact are waning for the EU, COP summits, the ICC (e.g., Netanyahu), and NATO’s future under a new U.S. president remains uncertain. Can these overarching institutions still play a key role and deliver value?
5. Corruption Surge: Scandals taint figures like Musk (DOGE, Trump funding), the King of Spain, and Le Pen (RN campaign fraud) and tons more. The system - person....both?
6. Vital Sectors Under Strain: Healthcare, education, public safety (e.g., crime, cyber threats), and infrastructure struggle due to underfunding, slow innovation, and weak governance. Can these sectors become sexy again?
7. Financial Resilience: Markets thrive on low interest rates and rapid technological advancements, including AI and beyond. Will "Big Tech" continue to grow and is AI becoming mainstream?
Oufff! The
world is grappling with an overwhelming array of critical, high-impact issues.
In my 60+ years on this planet, I can’t recall a time when the global landscape
felt so intricate and challenging. While I’m not in a position to prescribe
definitive solutions, a few ideas come to mind:
·
Make politics more engaging to attract
capable, visionary leaders—leaders who are genuinely connected to their
citizens and held to higher, long-term accountability.
·
Prioritize responsible investments in
vital public sectors to ensure their resilience and sustainability.
·
Embrace technology!
·
Europe: Shift focus toward reducing excessive
regulation while fostering productivity across the board, particularly in the
performance of overarching institutions.
These aren’t simple fixes, but they could be meaningful
steps toward navigating these complexities with greater purpose and impact.
Sources: The New York Times, The Economist, NRC, various
podcasts: The Rest is Politics, The Rest is Politics US, Goodfellows, Haagse
Zaken and the Daily. Books: Musk by Walter Isacsson, Israel Oct 7 23 by Lee
Yaron. Paper: The future of European competitiveness, Mario Draghi/European
Commission
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