The global economy defies pessimistic forecasts amid conflict in Ukraine

Global economy challenges pessimistic forecasts Despite the gloomy predictions that accompanied the start of the war in Ukraine in February 2022, the global economy has managed to dodge the announced recession, surpassing the growth expectations set by experts. The apparent strength of stock markets in countries such as the United States, Japan, or Germany, which have reached historic highs, could lead to the conclusion that the global economic situation is on solid ground and that risks are under control. However, Europe finds itself at a crossroads marked by the development of the conflict in Ukraine, which seems far from finding a short-term resolution. Various recent events, overlooked by the majority, support the idea that we are facing a prolonged conflict in the region. Among these events are the absence of intentions from Europe and NATO to initiate ceasefire talks in Ukraine, as well as the revelation of conversations among German army officials regarding the sending of Taurus missiles to the country with the purpose of destroying key infrastructures. Additionally, statements such as those of French President Macron, who does not rule out sending NATO troops to Ukraine, or the assertions of Slovak Prime Minister Robert Fico about the possible involvement of NATO members in bilateral agreements, fuel uncertainty about the future of the conflict. Paradoxically, it is suggested that the only possibility of achieving a ceasefire in Ukraine lies in a potential victory of Donald Trump in the November elections, as the former president has promised to seek negotiations to quickly end the war. However, this would entail less commitment to NATO, forcing Europe to reconsider its defense stance. In this context, the pursuit of Net Zero emissions targets is questioned by some, who argue that in a scenario of prolonged conflict, industry decarbonization and CO2 emissions reduction could compromise security. Dependence on third countries for the importation of strategic materials and the need for fossil fuels for the armed forces would be problematic aspects in a context of geopolitical tensions. Although the initial fears about the economic impact of the war in Ukraine have not materialized so far, there are lingering risks that could trigger significant consequences for Europe in terms of deficit, debt, and inflation if the situation evolves towards a wartime economy. For now, financial markets seem to ignore these risks, but uncertainty persists and economic stability could be threatened if geopolitical tensions escalate in the near future.