During his presentation at the SteelOrbis 2025 Spring Conference & 92nd IREPAS Meeting held in Athens on April 27-29, Nikos Vettas, general director and founder of the IOBE and professor of economics and business at Athens University, talked about economic challenges globally and in Europe, providing a complete macroeconomic overview and focusing on protectionism, trade flows, political tensions, and the role of demographics and technology in global development.
Global sentiment
According to the OECD, as Mr. Vettas pointed out, global business sentiment in the last four years was steady, but consumer sentiment has been weakening since late 2024, especially in the euro area, driven by the US market. The weakening of consumer sentiment has been reflected in the downwards revision of growth forecasts, but the revisions have been moderate so far.
Global market trends
Public debt growth is a significant indicator of the level of spending that countries are putting into the market, Mr. Vettas noted, stating that after the Covid crisis public debt in advanced economies rose significantly. He went on to state that markets rallied in advanced economies during 2022-24, but stalled in 2025 amid increasing uncertainties in global policies and with oscillations in energy prices. “We are going to be in a world with higher money costs and higher energy costs, and my sense is that this is going to last for the next five years for several reasons,” he said.
When it comes to metal prices, gold has reached historical highs, Mr. Vettas noted, whereas other metals, such as aluminum, copper, iron ore, lead, etc. have eased since their peak in 2022. Following the war in Ukraine, global food commodities also peaked, and inflation had a significant role in this, as global food commodities are a key indicator defining inflation as well. Another fundamental indicator is currency exchange rates. “Foreign exchange rates are notoriously hard to predict, because they are very deep markets and whatever expectations people have are very quickly incorporated into prices. The only thing that appears clear so far is that oscillations will continue, and the weakening of the dollar is not finished yet,” he stated.
International trade
Mr. Vettas next commented that the volume of global trade has not yet decelerated, after fully recovering from the shock of the pandemic crisis, but trade policy uncertainty is even higher than that experienced just after Covid. This is partly due to the protectionist policy put forward by the new US administration. So far, however, the announcements of higher tariffs have not been impacting trade or investments a lot, Vettas said, while pointing out that they have been freezing investments because everybody appears to be waiting for more clarity.
US imports have accelerated rapidly in the past few months, Vettas said, reflecting a likely stockpiling strategy of businesses ahead of anticipated tariffs on a broader range of imported goods. In this scenario, he noted, the tariffs imposed by the EU and the US on each other's imports were among the lowest among their main trading partners: the average tariff rate imposed by the EU on imported products was 2.7 percent, whereas the average tariff rate imposed by the US on imported products was 2.2 percent, until recently.
European challenges
Vettas said that European industry is facing a number of challenges, among which a more static rather than dynamic industrial structure, the green transition, the productivity gap between the EU and the US, the demographic downturn, the lack of digital skills, defense spending and immigration flows.
Vettas pointed out that the productivity gap between the EU and the US measured by GDP per hour worked has widened from 15 percent in 2002 to 30 percent in 2023, and only ten EU member states spend at least two percent of GDP on defense versus the six percent or more for the US. When it comes to demography, he said, the EU population is projected to gradually decrease to 447.9 million in 2050 and to 419.5 million in 2100. The median age of the EU population is expected to increase by 5.8 years between 2022 and 2100. “We’re getting older and fewer,” said Vettas, adding, “You cannot be a society where half of the people are not producing. If you are, then you have to make sure that the younger generations are empowered with very strong technologies. And since we're talking about productivity, even though in Europe there is a very broad and high-quality education system. When you go to the average population - and this is partly because the average population is elderly - you see that in terms of digital skills we're not doing great.” One last challenge for the European Union is how to manage immigration flows. According to Vettas, there is significant room for improvement regarding the integration of existing migrants and refugees in areas such as education, political participation, rules on permanent residence and citizenship, basic rights and discrimination, as better integration promotes economic growth, social cohesion, and prosperity.
Speaking of the green transition, he said industries soon realized that it was going to be highly costly in the short term, as the EU's climate neutrality targets are far more ambitious compared to those of its competitors.
Conclusions
In this scenario, Vettas said that the global economy has had to absorb major crises in the last few decades: the collapse of Lehman Brothers, the debt crisis in Europe which challenged the stability of the euro, Brexit, the Ukrainian-Russian war in Europe, inflation going from almost zero to extremely high levels, more tension in the Middle East, and now what we see coming from the US, which is “perhaps redrafting the whole textbook on global trade”. In spite of all this, he said, the global economy did not experience major downturns.
Vettas said he believes there are two possible conclusions: the optimistic one is that the global economy will continue to be resilient, while the pessimistic one could be that at some point the system will collapse. If it does, this is going to cause a reduction in global trade and a growth in protectionism, while, in his view, the probability of this second scenario is about 10 percent.