SECTORS OF THE GLOBAL ECONOMY
Agriculture/Forestry
Agriculture continues to play a vital role in both Europe and Asia, though its share of employment is declining as economies diversify. The most recent global update released by the FAO estimates that in 2023, about 916 million people worked in agriculture (including forestry and fishing) in the latest data point available in that release, representing 26.1% of total employment. Asia accounts for the largest share of agrifood-system employment. While Europe has a much smaller proportion, a Eurostat update released in early 2026 reports that 8.4 million people were employed in the European Union’s agricultural sector (including hunting and related service activities), with agriculture accounting for 3.9% of total EU employment in the latest year shown. This highlights the stark contrast between the two regions in terms of the size of the agricultural workforce and the speed of structural transformation.
EU agricultural labor productivity rose by an estimated 9.2% in 2025, driven by an 8.1% rise in real factor income and a 1.0% reduction in agricultural labor volume, with productivity now running approximately 49% above its 2015 baseline. Gains were uneven: sharpest increases were in Luxembourg, Poland, and Estonia, while steepest declines were in Croatia, Portugal, and Greece.
Entertainment/Tourism
Entertainment and Tourism:
The Asia-Pacific region has seen a strong rebound in tourism following the COVID-19 pandemic. According to the Pacific Asia Travel Association (PATA), international visitor arrivals reached 647.9 million in 2024, representing a 91.9% recovery compared to 2019 levels. In 2025, arrivals in Asia and the Pacific reached 331 million, growing 6% on the previous year, though still 9% below 2019 levels, with North-East Asia leading at 13% growth. International tourism is expected to grow 3–4% in 2026, assuming Asia and the Pacific continues to recover, global economic conditions remain favorable, and geopolitical conflicts do not escalate. This recovery has been driven by improved connectivity through expanded airline routes and infrastructure upgrades, simplified visa processes such as China's visa-free transit expansion and Thailand's "Six Countries, One Destination" initiative, and digital transformation trends like mobile payments and social media-driven travel, which are fueling outbound travel from India and Southeast Asia. China welcomed over 127 million visitors in 2024, accounting for 19.7% of the Asia-Pacific region's total, while Japan experienced a remarkable surge, reaching 36.87 million arrivals with a growth rate of 47.1%, the highest among major Asia-Pacific destinations.
Energy/Mining
Europe: The Russian invasion of Ukraine in 2022 accelerated Europe’s transition away from Russian fossil fuels and toward renewable energy. By 2024, renewables accounted for 46.9% of EU electricity generation, up from 34% in 2019, while fossil fuels fell to a historic low of 29%. In 2025, this shift deepened: wind and solar power together surpassed fossil fuels for the first time in 14 of the 27 EU member states. For the first time, wind and solar together surpassed fossil fuels, generating 30% of EU electricity in the first half of 2024 compared to 27% of coal and gas. Wind power grew by nearly 10%, and solar by 20%, supported by favorable conditions and capacity additions. In 2025, solar power continued its rapid ascent, growing to 13.2% of EU generation, while wind provided 16.9%. Coal-fired electricity production fell to a new historic low of 257 TWh—just over a third of its 2015 level—with 19 member states registering coal shares below 5%. Hydropower also rebounded after years of drought, helping renewables exceed half of the EU’s power mix. Overall, renewables provided 47.7% of EU electricity in 2025, maintaining most of the previous year’s gains despite challenging weather conditions.
Fossil fuel generation dropped sharply, with coal output falling by 24% and gas by 14%, driving a 17% overall decline in fossil-based electricity. However, in 2025, gas generation increased by approximately 8% to cover shortfalls from lower wind and hydropower output, though coal continued its structural decline. This structural shift reduced EU power sector emissions to less than half their 2007 peak and cut reliance on imported gas, saving billions in energy costs. Electricity demand, which had slumped during the energy crisis, rebounded slightly by 0.7% in 2024 but remains below pre-crisis levels.
Defense/Security
Europe has increasingly had to raise its defense spending, as the future of NATO, which remained the cornerstone of transatlantic security, originally formed in 1949 as a collective defense alliance against Soviet aggression, is increasingly in doubt. After the Cold War, NATO adapted to new missions, including counterterrorism and crisis management. Following the 9/11 attacks, NATO invoked Article 5 for the first time and deployed forces to Afghanistan. Today, NATO faces unprecedented challenges amid Russia's full-scale invasion of Ukraine and growing global instability. At its 75th anniversary summit in Washington in July 2024, NATO welcomed Sweden as its newest member and reaffirmed its commitment to collective defense. NATO launched Steadfast Defender 24, its largest exercise in decades, to strengthen deterrence and readiness on its eastern flank. In May 2026, NATO announced it is planning even larger exercises, the biggest since the Cold War, involving 500–700 air combat missions, more than 50 ships, and approximately 41,000 troops to practice repelling a Russian attack on alliance territory. Defense spending among the 32 allies surged by 15.9% in 2025. Total NATO defense spending was $1.6 trillion in 2025. In 2026, all NATO members met the alliance's 2% of GDP defense spending target for the first time, with total military expenditure reaching a record $1.4 trillion. Poland recorded the highest share at 4.3% of GDP, followed by Lithuania at 4%, Latvia at 3.74%, and Estonia at 3.42%. However, the United States alone continues to contribute $845 billion, accounting for 60.2% of the alliance's total military expenditure, while Europe and Canada collectively provide $559 billion (39.8%). The NATO summit in The Hague subsequently raised the guidance to 3.5% for weapons spending and 5% for defense spending overall by 2035.
Despite these efforts, NATO's performance is under scrutiny. The alliance must balance urgent support for Ukraine with long-term modernization, while managing internal political divisions and addressing emerging threats from China and hybrid warfare. NATO has pledged continued assistance to Ukraine, including advanced air defense systems, long-range precision fires, and F-16 fighter jets, but production bottlenecks and political uncertainty in member states remain major obstacles. In June 2026, Hungary's new government led by Peter Magyar lifted its previous veto, unblocking €6.6 billion from the European Peace Facility for military aid to Ukraine, likely to be used for air defense systems.
Financials/Investments
Foreign investment in China has sharply declined in recent years. After peaking at $344 billion in 2021, inbound foreign direct investment (FDI) fell to $114.8 billion in 2024, marking a 27% drop year-on-year and the lowest level in decades. In 2025, FDI into China continued its downward trajectory, falling by another 15% to approximately $97.6 billion, the lowest annual figure since the early 1990s. This downturn reflects growing investor concerns over China's restrictive business environment, regulatory unpredictability, and heightened state control over private enterprises. Beijing has attempted to reverse the trend by pledging further market opening and easing some rules, but foreign firms remain cautious due to capital controls, data security laws, and political risks. A survey by the European Chamber of Commerce in China released in early 2026 found that only 17% of member companies plan to expand their China operations in the coming year, the lowest level in two decades. While China's economy grew 5.3% in the first quarter of 2024, structural challenges such as property sector stress and weak consumer demand persist, adding to investor uncertainty. In 2025, GDP growth slowed to 4.7%, missing official targets and further dampening foreign investment appetite.
China's Belt and Road Initiative (BRI), launched in 2013, continues to evolve. Initially criticized for creating "debt traps," the BRI is now shifting toward smaller, greener, and less risky projects, emphasizing high-quality investment, project finance, and green energy initiatives. However, debt sustainability concerns remain acute: in 2025, 75 developing countries faced $22 billion in BRI-related repayments, raising fears of economic strain and sovereignty risks. In 2026, that figure has risen to an estimated $26 billion, with Zambia and Pakistan seeking restructuring talks under the G20 Common Framework. Italy, the only G7 country to join the BRI in 2019, formally withdrew in December 2023, citing limited economic benefits and strategic realignment with the EU and the United States. Meanwhile, the U.S. and G7 partners are advancing the Partnership for Global Infrastructure and Investment (PGII) as a counterweight to BRI. PGII aims to mobilize $600 billion by 2027, with the U.S. committing over $60 billion to date and focusing on strategic corridors linking India, the Middle East, and Europe. As of mid-2026, PGII has announced $85 billion in new infrastructure commitments, including a major railway project connecting the UAE to Saudi Arabia.
Healthcare/
Pharmaceutical
The COVID-19 pandemic exposed significant vulnerabilities in healthcare systems worldwide, including those in Europe and Asia. Both regions have since accelerated reforms aimed at strengthening resilience, expanding coverage, and modernizing infrastructure to better prepare for future health crises.
In Europe, most countries maintain universal healthcare systems, either fully tax-funded or through social insurance models. Nations such as Sweden, Finland, Norway, and Iceland provide comprehensive free healthcare, while others like Austria, France, and Germany operate two-tier systems combining public coverage with optional private insurance. Recent reforms across Europe focus on reducing barriers to access, improving affordability, and adapting to demographic shifts, particularly aging populations and the rising prevalence of chronic diseases.
Manufacturing
Manufacturing (Europe vs. Asia-Pacific)
Europe: pressure persists, even as “green re‑industrialization” accelerates. Europe’s industrial cycle in 2025 has been choppy: Eurostat reported that EU industrial production fell sharply month‑on‑month in April 2025 (‑1.8% in the EU; ‑2.4% in the euro area), while still showing modest year‑on‑year gains versus April 2024 (+0.6% EU; +0.8% euro area). This pattern—volatile monthly swings with only mild annual improvements—fits the broader “stagnation with bursts” narrative for European manufacturing: some months rebound, but the underlying momentum remains fragile. UNIDO’s Q3 2025 manufacturing update similarly characterized Europe as “largely stagnating” while other regions posted clearer growth, highlighting that Europe has not yet regained a consistently expanding industrial footing.
Germany and France: divergent month-to-month moves; weak baseline in parts of the bloc: Germany and France—still pivotal to European supply chains—showed mixed 2025 signals. An EU-member comparison for August 2025 (calendar‑adjusted) reported Germany’s industrial production down 4.6% year‑on‑year and France up 0.5% year‑on‑year, while EU production overall was up 1.1% year‑on‑year (and down 1.0% month‑on‑month). Germany’s dynamics also reflect “front‑loading” behavior linked to tariff uncertainty: the Bundesbank noted that industrial output rose notably in March 2025, with anticipatory effects ahead of expected tariff changes, and that pharmaceuticals (a sector with high U.S. export exposure) contributed strongly. France, meanwhile, posted a sharp monthly rebound in June 2025: Insee reported manufacturing output up 3.5% month‑on‑month (and total industry +3.8%), with a particularly large swing in transport equipment—driven by aerospace catch‑up and easing supply constraints in parts of the chain.
Real Estate
Property prices around the European Union have resumed growth after a period of correction. According to Eurostat, house prices in the EU rose by 5.4% year-on-year in the second quarter of 2025, following modest gains in 2024 after two quarters of decline in 2023. This recovery has been supported by easing inflation and interest rate cuts by the European Central Bank and the Bank of England in mid-2024, which improved financing conditions for buyers and investors. Despite these positive signs, the market remains cautious due to lingering geopolitical risks and structural supply shortages in major cities.
London continues to rank among Europe’s top investment destinations, driven by regeneration projects and strong rental demand. Prime areas such as Battersea, King’s Cross, and Paddington are attracting global investors, with projected price growth of up to 13.9% over the next five years and rental yields averaging between 8.5% and 9.2% annually for buy-to-let properties. Germany remains Europe’s largest commercial real estate market, valued at nearly $2 trillion in 2024, despite price declines of 7.4% year-on-year in the second quarter of 2024 due to high financing costs and economic uncertainty. Analysts expect stabilization as interest rates fall and ESG-driven retrofits boost demand for sustainable assets. READ MORE
Retail
The retail industry in Europe was one of the highest and most important industries, accounting for 11.5% of EU value added and employing nearly 30 million people. After severe disruptions caused by COVID-19 and the Russia-Ukraine war, the sector has shown signs of recovery. Retail sales in the EU grew by 1.0% year-on-year in August 2024, with non-food products up 1.7%, although foot traffic in physical stores remains below pre-pandemic levels. In January 2026, euro area retail trade volumes edged down 0.1 percent month-on-month, reversing the modest 0.2 percent growth recorded in December 2025, though volumes rose 2.0 percent compared with January 2025, suggesting that consumer activity remains stronger than a year earlier. Growth was particularly notable in non-food products, which expanded by 2.4 percent year-on-year, signaling gradual recovery in discretionary spending. Overall, the European retail market expanded by around 5% in 2024, led by retail parks and experiential shopping centers, while vacancy rates declined across most asset types, signaling resilience despite inflationary pressures.
E-commerce continues to reshape the retail landscape. Online sales accounted for 16% of total retail sales in Europe in 2024 and are projected to reach 21% by 2029, with annual growth of 7.8% across major markets such as the UK, Germany, and France. The UK leads in online penetration, where e-commerce represents 27% of retail sales, expected to rise to 32% by 2029. According to Euromonitor data, online retail in the UK now accounts for 31% of all retail sales, with further growth forecast to reach 36% by 2030. Germany and France follow with shares of 16% and 14%, respectively, highlighting the structural shift toward digital channels. The Central European e-commerce market (covering 11 countries) is expected to reach €206.6 billion in online consumer spending in 2026, an 8% increase, with Germany as the largest market and Greece leading growth at 11%. The EU's Single Market Strategy 2025 aims to reduce regulatory barriers, harmonize digital labeling, and tackle territorial supply constraints to strengthen competitiveness and support SMEs in adapting to omnichannel retail models.
Technology
Europe's technology sector in 2026 is best characterized as “strategic concentration at scale, with capital flowing to fewer, larger bets in defense, AI infrastructure, and industrial deep tech.” The digital transformation of the European economy remains in full swing, with the ICT sector contributing approximately 0.3 percentage points to GDP growth annually since 2021 and accounting for almost a quarter of total European economic expansion over this period. However, the venture financing landscape has sharpened considerably. In the first quarter of 2026, European technology companies saw capital concentrated in a small number of mega-rounds: Wavve closed its €1 billion Series D, French frontier AI lab AMI raised approximately €890 million, Nscale secured €1.1 billion in infrastructure financing, and these four companies alone accounted for over €3.5 billion in the quarter. This reflects a market that is increasingly filtering for strategic fit rather than experiencing a broad reopening of risk appetite.
Telecommunications
The internet and mobile broadband have permanently transformed global communication, enabling near real-time connectivity across borders and reshaping how individuals, businesses, and governments interact. In 2026, global 5G subscriptions reached approximately 4.2 billion, accounting for nearly half of all mobile subscriptions worldwide, up from 2.9 billion at the end of 2025. Yet 2.2 billion people remain offline—mostly in low- and middle-income economies—highlighting that the binding constraint is increasingly "quality of connectivity" (speed, reliability, affordability, and skills) rather than basic coverage alone. Mobile broadband coverage is described as nearly universal at the global level, but affordability and capability gaps persist, reinforcing the role of mobile networks as the primary gateway to digital services, financial inclusion, and public service access, especially where fixed infrastructure expansion is slower or capital-intensive.
Utilities
Utilities such as electricity, heating, and water remain essential to the quality of life across Europe. Most EU citizens enjoy near-universal access to these services, supported by strong regulatory frameworks and infrastructure. Under EU law, households have the right to be connected to electricity networks, and vulnerable consumers cannot be disconnected even if they cannot pay their bills. However, energy affordability remains a significant challenge. A 2025 study published in ScienceDirect found that approximately 17% of the EU population is considered "energy poor" according to expenditure-based indicators, with rates particularly high among income-poor groups, though a notable share of middle-income households also experience energy-related deprivations. Using a "union approach" that considers multiple indicators, up to 40% of the EU population (approximately 180 million citizens) would be classified as energy poor by at least one measure, though the overlap across indicators is minimal, with only 0.3% classified as poor by all four indicators simultaneously.
To strengthen resilience and sustainability, the EU is investing heavily in modernizing utility infrastructure. Programs under the European Green Deal and REPowerEU allocate billions toward electrification, renewable integration, and smart metering. The EU smart meter market is estimated at $8.53 billion in 2026, up from $7.72 billion in 2025, with projections to reach $14.03 billion by 2031 at a compound annual growth rate of 10.45%. Binding installation obligations under EU Directive 2019/944 continue to drive compliance acceleration across member states: Austria has surpassed 95% penetration, Belgium has achieved 70% coverage with 4.4 million devices, and Germany has legally enshrined a 2032 completion deadline. In June 2026, the European Commission launched a Roadmap on AI and Digitalisation in the energy sector, which recognizes smart metering as a key enabler for consumer participation, demand response, dynamic electricity pricing, and more efficient use of Europe's electricity grids. A new legislative proposal in 2026 aims to accelerate the rollout of smart meters across the EU, targeting minimum smart meter coverage in every member state. These initiatives aim to reduce energy poverty, improve efficiency, and support the transition to carbon neutrality by 2050.