In March 1923, Albert Einstein took to the podium in Madrid to explain that space and time are relative magnitudes that depend on the position of the observer. A century later, the global economy seems bent on confirming physics: that aggregated indicators showing signs of prosperity is a reality as certain as the well-being of families suffering from the rising cost of living is relative.
Trapped in a mirage reminiscent of the interwar period of the last century, we witness an apparent paradox: global activity continues to grow despite existing in an environment riddled with geopolitical disruptions, while the average citizen perceives how the gravity of inequality relentlessly distorts the ground they walk on.
The crisis of the free trade and democratic paradigm takes us back to the murkiest passages of the 20th century. Armed conflicts with the risk of systemic escalation, outbreaks of trade protectionism, inflationary tensions eroding real wages, and the impetuous rise of radical populisms threaten the international order. Since the outbreak of the pandemic nearly seven years ago, the uninterrupted succession of disasters has been demolishing the sanctuary of peace, multilateralism, and cooperation that the European ideal took for granted after the Cold War.
We live under an incessant bombardment of catastrophic news. Knowing that fear sells, media coverage over-represents the most unfavorable scenarios and our brain tends to retain the unsettling. And yet, the global economy has been coexisting with this swarm of disturbances for over five years without falling into recession.
We grow in a fragile and unequal manner, but we grow, while the main stock indices reach historic highs. For general reassurance, the darkest forecasts made by analysts have not materialized.
Banality of chaos
This resilience superior to what was expected rests on objective factors. Among them: the productivity gains associated with Artificial Intelligence, greater efficiency and the decarbonization of the global energy matrix, the increase in crude oil production in some countries, particularly the US, the decrease in consumption in others, especially in China, thus cushioning the upward price tensions of Brent, the increase in public spending, especially in defense, and the explosive private investment in data centers and digital infrastructures, as well as the porous capacity of trade flows to adapt to the bottlenecks of supply chains.
However, alongside these compensatory forces, a sociological phenomenon of unquestionable significance intervenes: the reconfiguration of agents' expectations and their translation into a lower vulnerability of markets to geopolitical shocks.
Given the nature of macroeconomics as a social science, theory has historically granted capital importance to expectations, turning them into the great battleground between Keynesian doctrine and neoclassical thought to explain how the vision of the future conditions the effectiveness of interventions and adjustments in the system.
Today, empirical evidence suggests that companies and markets have learned to navigate this environment of geopolitical turbulence. By discounting that catastrophic scenarios rarely crystallize - supported by risk mitigation and accumulated learning - agents do not drastically alter their investment and consumption plans in the face of each new episode. In this way, a dynamic of self-fulfilling expectations is generated, where the mere anticipation of a lesser factual distortion ends up attenuating the real impact of the shock on aggregate activity.
Thus, a gradual banalization of chaos occurs. We fit the chronicle of geopolitical hostilities or threats to key supplies with an increasingly muted overreaction. The evolution of global tourism - which has been breaking records for overnight stays amid closed airspaces and international tensions - constitutes the best proof of how homo economicus accommodates uncertainty, as if it were a chronic condition.
This collective adaptation stimulates aggregate activity, but entails the danger of sliding from rational pragmatism to irrational complacency. It is the typical dynamic of speculative bubbles, where prices become disconnected from fundamental variables.
Gray rhinoceroses
Detecting the moment when optimism ceases to be grounded is the great challenge of the markets; only those who jump off the train in time avoid suffering derailment. Hence the doubts about whether the massive valuation of AI responds to real productivity increases or to a mere over-expectation of return. Even more serious is that this insensitivity to risk leads us to ignore "gray rhinoceroses" of very high impact, albeit slow to mature and that can be seen coming on the horizon, such as demographic winter, climate change, or the widespread deterioration of democratic quality on the planet.
Certainly, the indicators show growth and markets at highs. In parallel, the "new optimists" demonstrate that, on a global scale, humanity has progressed in life expectancy, literacy, and reduction of extreme poverty. Undoubtedly, the world is a terrible place, but today it is better than yesterday and both statements are compatible. However, when delving into the details of microeconomics, the relativity of progress becomes bitter. While aggregates grow, the Western middle classes are experiencing their worst affordability crisis in decades.
We are evolving into a clear "K-shaped economy." An insurmountable gap has opened between an ascending arm —composed of large corporations, technology sectors, financial markets, and high incomes— and a descending arm made up of SMEs, middle-income workers, and vulnerable groups.
As the World InequalityReport 2026 attests, equity has deteriorated generally in advanced countries because the return on private capital (stocks, real estate, and financial assets) has systematically grown above wages and GDP.
While in the United States inequality manifests itself in hyper-concentration, where the 1% controls more than 35% of national wealth, in Europe the phenomenon erodes the middle classes and weakens the public sector, whose stagnant net worth prevents it from comfortably financing social cohesion.
Behind this deterioration operate three underlying forces: a globalization exposed to social dumping and regulatory arbitrage, the lack of international tax governance that guarantees fiscal progressivity, and a digitalization that has concentrated economic power in oligopolistic giants that today already compete with the states themselves for the capture of financing.
The consequences of this asymmetry go beyond the economic to intrude into the political. Extreme inequality fractures the pact of coexistence. When prosperity ceases to be perceived as the reward for effort and becomes an inaccessible privilege, institutional trust is destroyed and civil peace becomes fragile. The resentment of growing layers of the population is the fuel that nourishes the populisms that today weaken Western democracies.
The recent United Nations General Assembly reflected the absence of multilateral consensus to address the governance of AI, climate, or equity on the planet, confirming that political paralysis and lack of coordination among powers is the true evil of our time.
When the winds of polarization threaten to return us to the darkness of the bleakest past, it is worth recalling the image of Albert Einstein in Madrid on that March 5, 1923. After lecturing at the Ateneo, he went to the Royal Palace breaking protocol, with his wrinkled suit and the violin under his arm. He used to summarize his physics by explaining that an hour with a fascinating woman passes like a sigh, while a single minute on a lit stove seems like an eternity. A century later, progress remains a tragically relative magnitude: determining whether the world is getting better or worse ultimately depends on whether one happens to be a large digital corporation or an ordinary citizen.
Ricardo Santamaría. Country Risk Director of Cesce. Ricardo Santamaría, Commercial Technician and State Economist since 1997. He currently holds the position of Country Risk and Debt Management Director at Cesce, leading the team responsible for diagnosing the political and commercial risks of each country, as well as their business environment.