The global economy is operating in an environment that is simultaneously characterized by geopolitical conflicts, structural transformation processes, high levels of sovereign debt and a monetary policy phase following the inflation shock. Growth, stability and financing costs are in a state of tension that can no longer be explained by traditional cycles.

The financial markets are reacting increasingly sensitively to this mixed situation. Since 2025, it has become clear that the era of seemingly clear guidelines - expansive monetary policy, low interest rates, predictable globalization - is coming to an end. Instead, uncertainty, volatility and political factors are determining market mechanics. Although interest rate policy remains a key steering instrument, it is less clear-cut as it has to address inflation risks, economic slowdown and financial stability at the same time. The question is therefore no longer just how strongly markets grow, but under what conditions this growth is sustainable at all.

Against this backdrop, the key question arises anew: where are the economy and financial markets heading? Are we heading towards a phase of structurally weaker growth with higher volatility? Or will it be possible to create new stability through technological productivity gains, investments and institutional adjustments? The decisive factor here is less the short-term outlook than the interplay between monetary policy, fiscal policy, demographics and the geopolitical order.

Dr. Jürgen Michels, Chief Economist at BayernLB, stands for this macroeconomic classification. As a long-standing observer and analyst of global economic and capital market developments, Michels combines economic analysis with the perspective of a major European financial institution. His focus is on structural trends, monetary policy mechanisms and the interaction between the real economy and the financial markets.

The focus of his contribution is not on forecasting individual market movements, but on the strategic classification of the current situation: What forces are driving growth and inflation in the medium to long term? Where are the risks for financial markets and national budgets? And what adjustments are necessary to maintain economic stability under changing global conditions? This is just as much about the limits of traditional control instruments as it is about the question of what role trust, institutions and political capacity to act will play in the future.