Global Economic Slowdown: What It Means for You
Despite navigating a complex landscape of trade barriers and geopolitical uncertainty, the global economy has shown surprising resilience in 2025. However, this strength is likely masking a gradual deceleration. Recent forecasts from the OECD predict a global growth rate of 3.2% this year, dipping to 2.9% in 2026 – historically low figures. This isn’t a collapse, but a significant cooling.
The Weight of Trade and Geopolitics
The primary culprit behind this slowdown? Increased tariffs on international trade. These tariffs aren’t just abstract economic policies; they directly impact businesses and consumers. For example, the US-China trade tensions, while somewhat eased, continue to disrupt supply chains and increase costs for manufacturers. This, coupled with ongoing geopolitical instability – particularly the protracted conflict in Ukraine and simmering tensions in the South China Sea – creates an environment of heightened risk aversion, dampening investment.
Pro Tip: Diversifying your investment portfolio and considering assets less sensitive to global trade fluctuations can be a smart move in this environment.
A Glimmer of Hope: Emerging Asia and Inflation Control
Looking ahead to 2027, there’s cautious optimism. As the impact of tariffs diminishes, financial conditions improve, and inflation eases, the global economy is projected to regain some momentum, reaching a 3.1% growth rate. Crucially, emerging Asian economies are expected to be the main drivers of this growth. Countries like India and Vietnam are experiencing rapid industrialization and a growing middle class, fueling domestic demand and attracting foreign investment.
The good news on the inflation front is that most central banks are anticipating a return to their target levels by 2027. While some regions will continue to experience inflationary pressures, the overall trend is downward. This is largely due to tighter monetary policies implemented by central banks worldwide, although the effectiveness of these policies remains a subject of debate.
Spain and Aragon: Outperforming the Eurozone
Within Europe, Spain and the Aragon region are demonstrating relative strength. During the summer of 2025, both regions continued to grow at a “very appreciable” rate, exceeding the Eurozone average. Aragon’s GDP increased by 2.6% annually in the third quarter, while Spain saw a 2.8% increase. This growth is underpinned by robust domestic demand and a healthy labor market. Aragon’s unemployment rate stands at 8.5%, lower than the national average of 10.5%.
However, even these positive figures are tempered by rising inflation. Both Aragon and Spain experienced an inflation rate of around 2.9% during the summer months, driven primarily by energy costs. The underlying inflation rate, excluding energy and food, was more moderate at 2.4%.
Did you know? The Spanish government’s focus on renewable energy sources is helping to mitigate some of the inflationary pressures related to fossil fuels.
Emerging Threats: Risks on the Horizon
Despite the positive signs, the global economic outlook remains fragile. The balance of risks is tilted to the downside. Potential threats include further escalation of trade wars, a sudden correction in financial markets, and persistent concerns about high levels of government debt. Geopolitical risks, particularly in the Middle East and the South China Sea, also loom large.
A recent report by the International Monetary Fund (IMF) highlighted the vulnerability of emerging markets to rising interest rates and capital outflows. This is particularly concerning for countries with high levels of dollar-denominated debt.
The Impact of African Swine Fever
Closer to home, the outbreak of African Swine Fever in Catalonia is a significant concern for the agricultural sector. This highly contagious disease poses a threat to pig farming and could have a ripple effect on the food supply chain. The Aragon region is closely monitoring the situation and implementing preventative measures to protect its own livestock.
Frequently Asked Questions (FAQ)
Q: What is the biggest threat to global economic growth right now?
A: Increased trade barriers and geopolitical instability are the most significant threats.
Q: Will inflation continue to rise?
A: While some regions will experience continued inflationary pressures, the overall trend is expected to be downward, with most central banks aiming to return to target levels by 2027.
Q: How is Spain performing compared to other European countries?
A: Spain is currently outperforming the Eurozone average in terms of economic growth.
Q: What is African Swine Fever and why is it a concern?
A: It’s a highly contagious disease affecting pigs, posing a threat to livestock and the food supply chain.
For more detailed information, please consult the Boletín Trimestral de Coyuntura: https://www.aragon.es/-/boletin-trimestral-de-coyuntura
Want to stay informed? Subscribe to our newsletter for the latest economic insights and analysis. Share your thoughts in the comments below – what are your biggest economic concerns for the coming year?
