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Global economy faces strategic shift as nations prioritise autonomy over interdependence
Sectors once considered peripheral are now central to national security and economic resilience
- PUBLISHED: Sun 28 Sept 2025, 7:46 PM
As the global economy navigates a period of profound transformation, nations are increasingly shifting from a model of interdependence to one of strategic autonomy, an expert said,
“The world we grew up in—built on multilateralism, global trade, and institutional cooperation—is fragmenting,” Samy Chaar, Chief Economist at Lombard Odier, told Khaleej Times. “We’re moving from relying on others for strategic resources to securing them ourselves.”
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This shift, he explained, is not solely a consequence of recent political developments such as the Trump-era tariffs, but a broader, ongoing reconfiguration of global economic priorities. “It started before Trump, continued under Biden, and now it’s accelerating,” he noted.
Strategic sectors take centrestage
Chaar emphasised that sectors once considered peripheral are now central to national security and economic resilience. “Defence, energy, food, water, healthcare, and technology—these are now strategic resources,” he said. Europe, for instance, is investing heavily in electrification, nuclear energy, and renewables, while also ramping up defense spending amid waning reliance on NATO’s traditional security umbrella.
He cited BMW’s decision to build a new factory in Hungary as a prime example of reshoring—bringing production closer to home to reduce dependency on global supply chains. “Stress-testing the system shows that if you don’t build capacity locally, you’ll pay a premium for dependence,” Chaar warned.
GCC’s unique position
Closer to home, Chaar sees the Gulf Cooperation Council (GCC) countries as well-positioned to navigate this transition. “The GCC has the financial resources and surplus accounts to invest in autonomy,” he said. While food security remains a challenge, he believes the region can diversify suppliers and form strategic partnerships to mitigate risks.
“The oil sector is regaining momentum, and with the Fed’s recent rate cuts, credit conditions are improving,” he added. “This creates a positive outlook for business and investment in the region.”
Crypto and AI: Promise vs. reality
On emerging technologies, Chaar offered a nuanced view. While stablecoins—cryptocurrencies backed by assets—may disrupt traditional banking systems, he remains cautious about their broader economic impact. “Crypto flows remain benign. Central banks aren’t accumulating them, and they’re not yet part of mainstream consumption or investment,” he said.
AI, on the other hand, is seen as a demographic solution. “Countries with aging populations and shrinking labour forces—like Japan, South Korea, and Germany—are turning to AI not to replace jobs, but to fill gaps where human labour is no longer available,” Chaar explained.
Gold’s rise and what lies ahead
Gold continues to shine, driven largely by central bank purchases, particularly from China. “Retail investors haven’t joined the rally yet, but if they do, it could add another leg to gold’s upward trajectory,” Chaar said.
Outlook: Slowdown, not recession
Despite global headwinds, Chaar remains optimistic about the near-term economic outlook. “I expect a slowdown, not a recession,” he said. “Labour markets are stable, public spending is robust, and central banks are cutting rates. These factors should keep recession risks at bay.”
Somshankar Bandyopadhyay is a News Editor with more than three decades of experience. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.
