“I am interested in the future because I plan to spend the rest of my life there.” The quote is attributed to Charles F. Kettering (1876–1958), an American inventor and engineer. It captures the spirit of this report, which we have called The Year Ahead, Santander Research’s annual economic publication.

Here we share our outlook on the global economy, with special focus on the regions where Santander has a strong presence — spanning the United States, Europe, and our core markets in Latin America. We also focus on globally relevant topics, including the impact of artificial intelligence on the economy, the link between productivity and regulatory quality, the structural drivers of long-term interest rates, the EU-Mercosur agreement, and challenges in the housing and the automotive markets.

In recent years, heightened uncertainty and volatility have characterised the global economy. The world is undergoing unprecedented and disruptive changes due to short-term challenges and long-term structural trends. These are often intertwined and become difficult to distinguish. In today’s landscape, the main challenge for a research department is to separate the signals from the noise. The Year Ahead is an attempt to identify these signals and to share conclusions that contribute to the public debate on the issues that are shaping the future of the world.

The global economy is in transition between two eras, moving from ‘full globalisation’ towards what is being called the ‘age of strategic autonomies. While pinpointing a single moment is not easy, among the main drivers of this structural shift are: the rising role of China in the global geopolitical and economic landscape; the Covid-19 pandemic in 2020; the subsequent Russian invasion of Ukraine in 2022; geopolitical tensions in the Middle East; and recent trade policies in the United States. All these events have led countries to recognise the fragility of global value chains, reconsider their international alliances and strategic agreements, and reassess their trade and industrial policies. Geopolitics — or more precisely, geoeconomics (the intersection of geopolitical events and their impacts on the global economy) — have taken centre stage in analysis like never before.

The challenges ahead are significant. According to the International Monetary Fund¹ (IMF), global economic fragmentation could reduce world economic output by 7% over the long term, which means some USD 7.4 trillion in lost output. That’s roughly the equivalent of the combined size of France and Germany’s economies. International cooperation is key to reversing geo-fragmentation. The world needs to ‘new globalise’ under more solid and stable pillars.

The current situation overlaps with long-term structural transformations such as demographic, climate-related, and technological change that will become increasingly evident in the next five to ten years. The renowned economist Rüdiger Dornbusch, noted for his influence on international macroeconomics used to say: “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could”. A few data points help illustrate how much the world will change in the coming years. The United Nations forecasts² that by the mid-2030s there will be 265 million individuals aged 80 and older, outnumbering infants. Population ageing will have profound implications for pension systems, fiscal sustainability, and labour markets. On climate transition and countries development, according to UNCTAD,³ the financing gap to reach the sustainable development investments is about USD 4 trillion per year. Finally, the emergence of generative artificial intelligence (AI) will significantly reshape the global economy. Though we still lack concrete data on its impact, some studies point to substantial productivity gains. McKinsey (2023)⁴ estimates that generative AI could raise global labour productivity by 0.1 to 0.6 percentage points annually through 2040, depending on the pace of adoption. When combined with complementary technologies, the uplift could reach 0.2 to 3.3 percentage points per year, adding USD 2.6–4.4 trillion in annual economic value.

What will emerge from the intersection of all these demographic, climate, geopolitical, and technological trends? If someone claims to know the answer, be sceptical. The honest answer is we don’t know. Rather than offering definitive answers, this report seeks to help ask the right questions, based on reliable data and evidence.

According to the World Bank,⁵ around 1.5 billion people have been lifted out of extreme poverty worldwide since 1990 — equivalent to over 100,000 people per day on average, driven by strong and sound economic growth. However, the ‘triple transition’— demographic, energy, and technological — will require the world to accelerate growth even further to generate sufficient resources to meet rising needs. Unfortunately, the current five-year average global growth projection stands among the lowest in decades.

The world needs to ‘reset’ the growth pattern urgently. Accelerating long-term growth requires higher investment, and it can only increase with greater financing. That’s why smart regulation that boosts this financing is essential, by channelling savings into investments, innovation and jobs. Several findings — included in this report — suggest that well-balanced regulation (which contemplates growth) has a significantly positive impact on productivity and, of course, long-term economic growth.

Today’s world is full of risk and uncertainty. But beyond that, it is also full of transformation and opportunities. Because it is not about eliminating risk (which is impossible), but about building more resilient and inclusive economies that are capable of fully seizing the opportunities that lie ahead.

Welcome to The Year Ahead. We hope you enjoy it.

1. International Monetary Fund (August, 2023), ‘The High Cost of Global Economic Fragmentation’, Washington D.C.
2. United Nations (2024), ‘World Population Prospects 2024: Summary of Results‘, New York.
3. United Nations Conference on Trade and Development (September, 2023), 'SDG Investment Trends Monitor (Issue 4)'.
4. McKinsey Global Institute (June, 2023), ‘The economic potential of generative AI: The next productivity frontier’, McKinsey & Company.
5. World Bank (October, 2025), 'Poverty overview', Washington D.C