Inflation falls but fails to appease voters
Although inflation has fallen in most economies around the world by 2024, its effects on public confidence are still strong. Soaring prices in recent years have led voters to turn against incumbent governments. The trend against ruling parties is global, from the US, UK, Germany, France to Botswana and Panama.
In the United States, inflation and higher prices were among the factors that helped Donald Trump return to the White House after a four-year absence. His victory marked a change in the American political landscape and could bring new challenges to domestic institutions and international relations.
Global political upheaval
South Korea, under pressure from the opposition's dominant parliament, faces a crisis as President Yoon Suk Yeol imposed martial law but it was later overturned by parliament, leading to Mr Yoon facing impeachment.
In Europe, Germany - the continent's leading economy - has experienced major political upheavals as Chancellor Olaf Scholz lost a no-confidence vote following the collapse of the ruling coalition between the Social Democratic Party (SPD), the Free Democratic Party (FDP) and the Green Party, paving the way for early elections, scheduled for February 23, 2025.
Another leading European country, France, also fell into a serious political crisis after Prime Minister Michel Barnier's government was voted out of confidence by the National Assembly in early December, putting President Emmanuel Macron under immense pressure.
In Asia, Japan faces a period of uncertainty, especially after the defeat of the Liberal Democratic Party (LDP) in the Lower House election.
One place that has not changed is Russia, where Vladimir Putin was re-elected president with 88% of the vote. Russia continues its military campaign in Ukraine, making significant territorial gains. The big question is how Trump’s return to the White House will impact the conflict. He has promised to end the conflict in a day, although he has since admitted it could take longer. Leaks suggest that Trump could push for a freeze on fighting along the current line of contact, using the leverage of US military aid to Ukraine to force President Zelensky to negotiate with Russian President Vladimir Putin.
Middle East: Escalating and Unexpected War in Syria
The Middle East witnessed some notable milestones. Israel expanded its military campaign from Gaza to Lebanon, throwing Hezbollah, an Iran-backed militant group, into chaos. A series of Hezbollah leaders were assassinated, significantly weakening the organization and Iran’s position in the region.
In particular, Syria suddenly changed when President Bashar al-Assad's regime collapsed in just 11 days thanks to a closely coordinated opposition coalition. This event was likened to Syria's "Berlin Wall", ending 53 years of rule by the Assad family and bringing new hope to a country that had been engulfed in civil war, although Syria's future remains uncertain.
Technology and Business: The AI Era
On the business front, artificial intelligence (AI) continues to be at the heart of innovation and growth. Yet companies around the world are struggling to adapt to AI. Tech companies dominate the financial markets, with seven of them accounting for more than a third of the S&P 500’s market capitalization. Elon Musk, who runs one of those companies, Tesla, is an adviser and donor to President-elect Donald Trump. The combination of tech appeal and political power could shape the landscape in 2025.
