Global Economy Shaped by Geopolitics

The global economy is increasingly influenced by geopolitical factors, with major powers using economic interdependence as an instrument of influence. Governments are prioritizing economic security and supply-chain resilience, leading to a shift towards selective industrial policies and market diversification. The use of economic sanctions, trade tariffs, and control over international payment systems is becoming more common. China's dominance in rare-earth production and refining capacity gives it significant influence over technologies such as electric vehicles and advanced defense systems. Medium-sized and smaller countries are seeking to address vulnerabilities in critical sectors, including energy, semiconductors, and digital infrastructure. Domestic industrial policies are gaining traction, with initiatives such as the EU's Industrial Accelerator Act aimed at strengthening strategic autonomy and improving economic resilience.