The major challenges facing the global economic system

The 15th anniversary of EsadeGeo, Esade’s Center for Global Economy and Geopolitics, brought together leading voices in Madrid to develop a shared diagnosis: the world economy is displaying more resilience than anticipated, yet it is advancing on terrain marked by structural tensions, selective fragmentation, and deep vulnerabilities, particularly in the developing world.

In a context in which uncertainty has become structural, the meeting underscored the need for strong institutions and for a strategic perspective capable of linking business, international politics, and development.

Structural certainties and major fragilities

The keynote address was delivered by journalist Martin Wolf, associate editor and chief economics commentator at the Financial Times, who outlined a two-part map of the global economy: what can be taken as given, and what remains open and uncertain.

Among the certainties, he identified five trends:

• Demographic change (aging and population decline in most major economies, with notable exceptions such as Africa and South Asia).
• Technological dynamism, with AI as a protagonist.
• The historical trajectory of global growth over recent decades.
• The shift of the center of production toward Asia, especially East Asia.
• Global warming, which has already surpassed 1.5 °C above pre-industrial levels.

Set against these constants, he highlighted the major political unknowns: the possibility of major wars, financial crises, and new pandemics.

In the short term, Wolf emphasized the resilience of the global economy and its tendency to grow at around 3% barring catastrophic events, even under conditions of high political volatility. However, he warned that the most decisive fragilities lie elsewhere: the breakdown of relations among major powers (with the attendant risk of conflict), shrinking fiscal space in many advanced economies, and the persistent vulnerability of the financial system.

Looking to the long term, he identified forces that could slow growth—demographics and geopolitical fragmentation—as well as others that could accelerate it. Among the latter, he highlighted the productive potential of artificial intelligence, with the caveat that it may also bring greater social instability, and the energy revolution based on renewable technologies, which could substantially reduce energy costs and transform current development models, especially in emerging economies. His conclusion was unequivocal: the world is moving in an unstable equilibrium, with real risks of deterioration, but also with grounds for optimism if intelligent decisions are made.

Trade resilience, but a “default on development”

Rebeca Grynspan, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), offered a counterpoint focused on trade, global governance, and the realities of the developing world. Her initial diagnosis aligned with Wolf’s on one key idea: we are living through an “uneasy resilience.” Trade and economic activity are holding up better than expected, but that resilience does not necessarily translate into progress.

On the trade front, she noted that the most pessimistic forecasts have not materialized and that global trade performance has been surprisingly robust. She qualified this assessment by pointing out that part of this strength is driven by cyclical dynamics—such as front-loading of imports in anticipation of tariffs—and by the fact that, despite a tougher trade regime, a fully open tariff war has not yet emerged due to ongoing negotiations.

More importantly, she identified structural factors underpinning trade resilience:

• Strong growth in services trade (less exposed to traditional barriers).
• The expansion of South-South trade.
• The momentum of goods linked to artificial intelligence and clean technologies.

On this last point, she connected trade dynamics to a broader transformation: the rise of renewables and their potential as a lever for development and for closing structural gaps.

Countries are not defaulting on debt; they are defaulting on development

However, Grynspan shifted the focus to a fragility that, she warned, receives less attention because it does not always trigger market crises: the erosion of development capacity in many countries of the Global South. She stressed that billions of people live in countries where debt servicing outweighs spending on health or education, capturing the tension in a stark phrase: “countries are not defaulting on debt; they are defaulting on development.” She added that investment flows are retreating and that the most vulnerable countries face disproportionate trade pressures, exacerbating their dependence on exports as a source of foreign currency.

Europe, between rivalries, alliances, and institutional reform

The final conversation between the two experts, moderated by EsadeGeo Director Angel Saz-Carranza, brought the debate to Europe and the future of the multilateral order.

Wolf described the EU as an actor caught between two major powers with predatory incentives: on one side, an increasingly hostile US policy toward Europe; on the other, a Chinese strategy that, in his view, aims to dominate global manufacturing and exerts pressure on Europe’s industrial base. His recommendation was that Europe come to terms with a less benign environment and strengthen its economic and strategic defense capacity, while also exploring alliances with key actors such as India and African countries.

The EU has been caught between two major powers with predatory incentives: the US and China

Grynspan framed the issue as a matter of political choice: multipolarity is already a fact, but what remains to be seen is whether it will coexist with multilateralism—making the system more inclusive and governable—or whether it will lead solely to fragmentation and collective loss. She argued that multilateralism requires reform to rebuild trust, including greater agility, flexibility, and responsiveness. At the same time, she maintained that Europe remains an essential actor in building coalitions and agreements.

In a more forward-looking vein, she also pointed to areas of economic cooperation that coexist with rivalry, such as China’s potential as a market for European services as consumption patterns evolve. In terms of alliances and credibility, she underscored the importance of Europe advancing strategic trade agreements, citing Mercosur as a test of its ability to diversify partnerships and build new networks of cooperation.

Geopolitics is no longer an “external issue”

Throughout the event, the 15th anniversary of EsadeGeo reinforced an idea running through contemporary debates: geopolitics is no longer a peripheral concern for governments or companies, but a decisive dimension for understanding risks, opportunities, supply chains, the energy transition, industrial policies, and institutional stability.

In this sense, the gathering celebrated the very rationale of the center itself: connecting academic analysis with public debate to interpret a world undergoing accelerated transformation. A world capable of sustaining growth and trade despite shocks, yet marked by latent fractures, by debt burdens that constrain the development of millions of people, and by an international order that can only be sustained—and renewed—if institutions adapt and actors choose to invest in cooperation, reform, and strategic vision.

A center created to address global challenges

EsadeGeo, chaired by Javier Solana—former Secretary-General of NATO and former High Representative of the European Union for Common Foreign and Security Policy—was founded in 2010 with the aim of being more than a space for education and research, also becoming a forum for dialogue and debate capable of contributing proposals and data to address major social challenges.