Expert voice

What were the most significant geopolitical events of 2024?

Isabelle Job-Bazille: Now more than ever, geopolitics and the major risks of instability they pose are taking front and centre stage, to say the least. Geopolitical news was already abundant in the early months of 2024, with the most acute tensions generated, of course, by the wars in Ukraine and in the Middle East.

2024 was also marked by several elections around the world, often resulting in the rise of populist parties. The level of uncertainty in France – and in Europe – moved up a level with the dissolution of the National Assembly the evening after the European elections at the beginning of June, affecting the budget process and political life in ways we all remember.

However, it was without doubt the election of Donald Trump, in November, in the United States, that had the most decisive impact on the world. The new president’s statements and initiatives have disrupted global geopolitical and economic balances and relationships of power. The Trump administration’s positions have forced the European Union to dramatically accelerate its shift towards strategic autonomy, particularly in terms of defence, while trying to maintain its environmental and societal goals, whereas the United States has made a complete U-turn in this area.

What are the economic consequences of the situation you have described?

I. J.-B.: The process of disinflation that began at the end of 2022 and the central bank rate cuts that have accompanied it since mid-2024 lie at the core of the economic scenario at work today. That said, the current geopolitical context weakens this scenario and is a powerful destabilising factor for the global economy.

Wars create disruptions to prices and trade. Europe felt this sharply in 2022, when the Russian invasion of Ukraine triggered an energy crisis. Another example was in the Red Sea, where Houthi attacks led shipping companies to reroute their ships, thus increasing the price of freight. Any resurgence in conflicts or, on the contrary, prospects for ceasefires, have a significant impact on prices, particularly energy and food prices.

Donald Trump’s policies, particularly the fierce trade war he triggered upon his arrival in the White House, and declared outright on 2 April 2025 with the announcement of “reciprocal” trade tariffs, are also a major cause of turmoil, particularly given the extremely erratic nature of decisions by the US. In return, those countries targeted are reacting and imposing counter-tariffs on American imports. The calendar and final scale of all these measures are highly uncertain, rendering their impact on inflation and on the economy particularly hard to assess. The additional costs will be absorbed by the exporter, the importer, or passed on to the end consumer depending on the product, the competitive context and different players’ room for manoeuvre. Whatever the case, this trade war is sure to lead to a drop in trade, as well as a reallocation of trade flows around the world.

The most immediate impact of this environment is the high level of uncertainty it creates, uncertainty that could be detrimental to the economy, leading to wait-and-see and precautionary behaviour, delaying investment and consumption decisions.

Lastly, the essential increase in military spending with which the European Union is confronted is a potential stimulus for the European economy, but also complicates things from a budgetary perspective, particularly for the most indebted countries.

What do you see as the outlook for 2025?

I. J.-B.: More than ever, the outlook is dependent on the course of US geopolitics and economic policy. Economic “predictability” is today very poor, given the lack of visibility and the depth of upheaval.

The US economy has so far successfully resisted the rise in inflation and interest rates, regularly surprising the world with its performance. Donald Trump’s economic policy is worrying economic players, however, and could weigh on growth at first; the question is whether the likely tax cuts and deregulatory measures announced will offset these negative effects and support growth further down the line.

China is putting in place measures to boost consumption, which has been hit hard by the deep housing crisis affecting the country and undermining household confidence. Externally, however, the country is the main target of the US trade war and could suffer as a result.

In the eurozone, the economy has been slowly picking up speed again, after household consumption resumed last summer. However, the Trump administration’s policy is changing the playing field. The direct impact of additional trade tariffs may be relatively limited, but the climate of uncertainty it has created could delay the recovery of consumption and, to an even greater extent, investment.

The massive trade war triggered by Donald Trump is going to penalise the world economy, disrupting international trade and supply chains. Until we have clearer visibility on tariffs, however, any prognosis is very risky.