Column by the President of Hitachi Research Institute, Mizoguchi
As we think about what the new year will be like, it is helpful to first reflect on the defining moments of 2025. Politically, the global landscape has shifted noticeably since the inauguration of President Trump, with the spread of national prioritization becoming increasingly apparent. Across national security, economic, and immigration policies, many nations have moved further to the right, making the prioritization of national interests and security the new normal. This trend represents not only a “retreat from the storm” to protect citizens amid rising geopolitical tensions, but also a choice born out of the frustrations stemming from political leadership and widening social disparities. The world economy in 2025 began with concerns that the Trump administration’s aggressive tariff policies might throw the global economy into chaos. In reality, global markets were buffeted by uncertainty surrounding U.S. policy, yet found an unexpected stability, supported by increased government spending - particularly in defense- and investments driven by the promise of artificial intelligence (AI).
Europe has endured unprecedented heatwaves, while devastating floods have struck Sri Lanka and Pakistan. Massive wildfires have swept across South America and California, underscoring the normalization and intensification of extreme weather events. At the same time, the gap between rich and poor has become even more pronounced. The top 10% of the world’s wealthiest individuals now owns 75% of global wealth, whereas the bottom 50% possess a mere 2%. In 2024, the total market capitalization of listed companies worldwide reached $114 trillion, with 54% concentrated in the United States and 90% held by the top ten countries. As Thomas Piketty has shown, if the structure in which the rate of return on capital exceeds the rate of economic growth, thereby making capital income more advantageous than labor income, continues to persist, it is highly likely that this inequality will keep widening in the future. The remarkable growth of capital markets in 2025 was driven by expectations of AI-driven value creation. AI-related stocks now account for approximately 40% of the U.S. stock market, and ambitious investment plans for AI development and data center construction are being announced daily.
Over the past 80 years since the end of World War II, the world has enjoyed the benefits of peace, with no direct wars between major powers. During this period, the global population has tripled, average life expectancy has doubled, and world GDP has grown fifteenfold. The number of democracies continued to rise: in 1974, there were 121 autocracies and 37 democracies, but by 2002, these numbers had reversed to 85 and 91, respectively. However, in 2024, for the first time in twenty-two years, the number of autocracies once again surpassed that of democracies, reaching 91 and 88, respectively. In terms of population, the share living under autocratic regimes has grown from 49% in 2004 to 72% in 2024. The global order is shifting from a balance of “power,” “rules,” and “international cooperation” to one in which “power” increasingly takes precedence. Values are in flux, and the world is undergoing a process of reorganization.
Based on this understanding of the world, Hitachi Research Institute has identified the following risks that should be considered for 2026.
In the future, AI will function as an important social infrastructure of the next generation as an "AI stack" composed of integrated layers - agentic AI, AI models, data platforms, and underlying AI infrastructure, while going through the initial trial stage. This transformation will position AI as a critical social infrastructure for the next generation. The potential benefits are vast: AI may drive productivity gains, integrate value chains, revolutionize healthcare by overcoming intractable diseases, and enable safe operations in hazardous environments such as space or nuclear reactors. These advances could mark a significant leap for humanity. On the other hand, the risks are equally profound. Poor governance could lead to social disorder, while the misuse of AI might escalate conflicts or even threaten mental well-being.
Meanwhile, the world’s money supply continues to expand, with the ratio of money to GDP now exceeding 140%. The market capitalization of listed stocks relative to GDP is higher than during the dot-com bubble or the global financial crisis. The interplay of advanced AI and expanding capital, set against a “power”-based geopolitical landscape, is increasing global volatility and reducing predictability. Even the most renowned prophets, such as Michel Nostradamus or Baba Vanga would struggle to foresee what the future holds. Our best course is to remain vigilant, consider a wide range of scenarios, and prepare for the diverse risks that may emerge.
We provide you with the latest information on HRI‘s periodicals, such as our journal and economic forecasts, as well as reports, interviews, columns, and other information based on our research activities.
Hitachi Research Institute welcomes questions, consultations, and inquiries related to articles published in the "Hitachi Souken" Journal through our contact form.
