The Global Growth Engine: 2025 And Beyond

2025-03-05 12:58:00 ET

Summary

• We think economic growth happens when human ingenuity is combined with innovative resources to create new ways of doing things. We call this process the perpetual growth machine.
• Going into 2025, the PGM remains strong, with the potential for other regions to start closing the gap with the United States.
• The industrial sector remains strong and has shifted from large, centralized products to smaller, smarter, and more distributed technologies.
• Looking ahead to 2025 and 2026, a potential wildcard for growth is a peace dividend.
• Over the next several years, I fear that much of the underlying growth will end up being masked by a significant increase in volatility.

What drives growth on a global scale? And why does growth occur? On the 50th episode of The Active Share, Hugo is joined by William Blair’s Olga Bitel, partner, global strategist, and Simon Fennell, partner, portfolio manager, for an insightful conversation on the outlook for 2025. Through the lens of economic growth, they discuss key topics such as accelerating innovation, artificial intelligence (AI), the insatiable demand for compute power, growth dynamics across emerging markets (EMs), and the impact of what Olga calls the “perpetual growth machine.”

Transcript

Olga, why does growth happen?

Olga Bitel: That’s a billion-dollar question. We think economic growth happens when human ingenuity is combined with innovative resources to create new ways of doing things. We call this process the perpetual growth machine (PGM).

Now, economic growth is highly diffused, organic, and continuous. It’s born out of each person’s innate desire to better our condition in life. But at the same time, our individual and collective appetite for improvement is constantly bumping up against others’ unwillingness to change. The result of this continuous tug of war is then measured as economic growth....

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