Global economic trends in the first quarter of the 21st century

Since the start of the new millennium, the world’s wealth has been radically reshaped, and that looks set to continue

Reuters / Al Majalla

Global economic trends in the first quarter of the 21st century

last update on 25 Dec 2025

The 21st century has so far presented a complex picture of shifting fortunes, circumstances, and results. In recent years, the world has undergone profound economic, social, and political transformations that have reshaped the global balance of power and repositioned key actors, heralding a new wave of economic powers, including China, India, Saudi Arabia, Türkiye, Indonesia, and Singapore. In contrast, Western Europe’s share of the global economy has shrunk for the first time since the Industrial Revolution.

As 2025 draws to a close, the world is drifting towards a multi-layered protectionism that may affect free trade and globalisation. The contours of the new century reveal both opportunities and challenges. Entering the second quarter of the century, artificial intelligence (AI) and its necessary digital infrastructure are set to be the new global competition. According to estimates by consultants at McKinsey, up to $6.7tn could be spent building data centres.

Banks now worry about a new AI ‘bubble’ reminiscent of the mortgage crisis that caused such painful economic spasms in 2008-09, which triggered a deep global recession. The Covid-19 pandemic in 2020-21 brought world trade to a near standstill as borders closed and production lines stopped. COVID-19’s impact continues to manifest in high inflation, labour market difficulties, low growth, disrupted supply chains, and debt burdens.

Flying through turbulence

In the first 25 years of the 21st century, the world has endured numerous wars and conflicts. After Islamist terrorists attacked the United States with planes on 11 September 2001, the US invaded Afghanistan later that year. Two years later, it invaded Iraq (American forces only recently left the former and still retain a presence in the latter). In 2011, the Middle East and North Africa witnessed widespread protest movements, some of which overthrew longtime dictators and others triggered prolonged civil wars. In 2022, Russia invaded Ukraine. In 2023, Israel occupied Gaza, while Sudan began tearing itself apart.

In between, there were threats to global shipping lanes and natural disasters, which left thousands dead or displaced in countries such as Türkiye, Syria, Libya, and Morocco. Meanwhile, the effects of climate change were felt in huge wildfires in Europe and the US. Agricultural land became more precious, given the planet’s straining capacity to sustain a population of more than eight billion.

Beyond food security, there are concerns about the estimated annual loss of approximately 324 billion cubic metres of freshwater, with implications for employment, migration, and biodiversity. Despite the recommendations of the 2015 Paris Climate Conference to reduce carbon emissions and limit global warming, slow implementation and weak commitment from the world’s largest polluters suggest a period of climatic uncertainty, the risks of which may well surpass current scientific projections.

AFP — A demonstrator approaches a boat stuck in the dried-up bank of a canal, during a rally at the Umm El Wadaa marsh, southeast of the Iraqi city of Nasiriyah, on 16 August 2022, to demand solutions for water scarcity and drought.

An era of prosperity

Despite all this, the first two and a half decades of the third millennium were economically prosperous, mankind benefiting from major advances in science, technology, and knowledge, while developing economies registered impressive growth. Global gross domestic product (GDP) rose from $34tn in 2000 to $114tn by 2025. Over the same period, average global per capita income rose from $5,494 to $14,210.

In industrialised nations, the average income hit $60,320, compared to $7,290 in South-East Asian countries and $6,800 in emerging and developing economies. Per capita income exceeded $141,000 in Luxembourg, $111,000 in Switzerland, $107,000 in Ireland, $94,000 in Singapore, and $90,000 in the US, according to data from the International Monetary Fund (IMF). The US Census Bureau reported that 33% of American households earned more than $150,000 in 2024, compared with 5% in 1967. At that time, the US economy was valued at $860bn. Today, it is $30.5tn.

In industrialised nations, the average income hit $60,320, compared to $7,290 in Southeast Asia and $6,800 in emerging and developing economies

Over the past 25 years, average life expectancy has risen by nearly six years, driven by medical advances, declining child mortality rates (particularly in sub-Saharan Africa), the eradication of epidemics, and a significant reduction in global poverty and illiteracy. More women in the workforce have contributed to improved household living conditions and higher levels of education; technology has reduced production costs; and globalisation has facilitated access to goods and services once the preserve of the very wealthy.

Some describe it as a "century of economic opportunity and social mobility" despite the inequalities deepened by globalisation and the post-1945 world order. Across much of the world, middle classes expanded, consumer societies flourished, infrastructure was built, public services took shape, and transport networks developed. This improved the standard of living, driven by new scientific knowledge, urbanisation, and technology. This, in turn, improved both production and communication.

Marco Longari / AFP — President of China Xi Jinping, President of Brazil Luiz Inacio Lula da Silva, South African President Cyril Ramaphosa and Prime Minister of India Narendra Modi gesture during the 2023 BRICS Summit.

The rise of the South

Advances have reshaped the global distribution of wealth. For most of the period since the Industrial Revolution in Europe and North America, production was largely concentrated in the Global North. Economies in the Global South (for instance, in Africa, South America, or Southeast Asia) often relied on the export of raw materials. Today, the landscape is profoundly different, with China and India now major economies.

From an agrarian economy in the 1970s, China is now one of the world's largest industrial powers and a leading exporter. Since joining the World Trade Organisation in 2001, it has benefited from globalisation. Ever since, China's economy has grown 16-fold. By comparison, Italy's GDP was $1.2tn in 2000 and now stands at $2.5tn. The UK's GDP rose from $1.7tn to $3.7tn.

At the turn of the century, India's economy was worth $500bn. Today it is worth $4.3tn, making it the world's fifth-largest economy, behind the US, China, Japan ($4.4tn), and Germany ($4.9tn). In Eastern Europe, Poland's GDP passed $915bn, overtaking Sweden ($630bn), while Indonesia, a former Dutch colony, had a GDP of $1.5tn (its former colonial power, the Netherlands, had a GDP of $1.2tn).

Wealth in the Middle East

In the Middle East, Saudi Arabia's economy grew from around $190bn to $1.27tn in the first 25 years of the century. It now ranks 19th globally and is the largest economy in the Arab world, its long-term plan to diversify having been outlined in Vision 2030. It remains the world's largest energy exporter, with state energy giant Saudi Aramco also investing in developing non-fossil fuel technologies. Concurrently, the Saudi private sector is expanding into industry, services, and healthcare.

In parallel, the UAE has grown sixfold over the past 25 years, its GDP rising from $102bn to $602bn. Likewise, Qatar's GDP has ballooned from just $18bn in 2000 to $251bn by 2025, according to the IMF. Alongside Saudi Arabia, the UAE, and Qatar, the GDP of six other Middle Eastern countries now exceeds $100bn: Egypt, Iraq, Algeria, Morocco, Kuwait, and Oman. Their combined economic output exceeds $ 3.6tn, according to the IMF. This is the size of the French and British economies combined and represents about half of Southeast Asia's total GDP.

Reuters — A group photo of the leaders and representatives of the Arab countries participating in the Baghdad Summit on May 17, 2025.

The IMF calls the landscape "turbulent," with forecasts "bleak" and the future "unclear". It foresees a phase of adjustment, particularly in relation to international trade, rising tariffs, geopolitical tensions, competition over 'rare earth' minerals, the militarisation of space, and rivalries in cyberspace and AI. The IMF projects weak growth of less than 1.5% in advanced economies, particularly in Europe, whereas developing economies in Asia, the Middle East, and Africa are projected to grow by 4% between 2026-30.

Clouds on the horizon

The global growth trajectory is also showing a gradual decline, slowing from 3.3% in 2024 to 3.2% in 2025 and further to 3.1% in 2026; therefore, policymakers must restore confidence by enacting reforms in policy, customs, trade, and taxation to rebuild safety buffers. Key priorities include safeguarding the independence of central banks, facilitating private sector growth, creating skilled jobs, intensifying structural reforms, and reducing fiscal vulnerabilities, particularly in major economies with high debt levels.

Data show that global debt, including that held by governments and the private sector, hit $337.7tn in the second half of 2025. This shows the fragility of the international financial system and points to a growing margin of risk in the years ahead. A lot will depend on whether trade barriers can be dismantled, wars can be ended, and states in need of reconstruction can be rebuilt. From Gaza to Ukraine via Sudan and Yemen, cranes need to replace drones and missiles in the skies.

As the world steps into 2026, analysts wonder whether traditional industrial powers will continue to relinquish their long-held positions to emerging forces, and whether the American eagle can outmanoeuvre the Chinese dragon, as Europe comes to terms with becoming an ageing continent. One thing is for sure: history does not move in reverse.

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