At the beginning of the year, it's easy to get stuck in uncertainty. Geopolitics delivers new surprises daily, technology is reshaping business models faster than ever before and making forecasts is increasingly difficult. Yet the real economic movement shows that in a confusing environment, opportunities do not disappear — they simply take on new forms.

Looking back at the previous year is telling in this regard. Global economic growth remained above 3 percent, a respectable result in what is a more unstable environment. Notably, it was not a so-called "wait and see" year.

Worldwide, the volume of mergers and acquisitions reached nearly $4.5 trillion — one of the highest levels in the past four decades. These deals extended well beyond the artificial intelligence and tech sectors. Healthcare, consumer goods, logistics and energy were also highly active.

This shows that capital moves even when the world is unsettled. In fact, it moves especially then.

The new year has not begun easily. U.S. politics, including the unpredictability of Donald Trump, adds to the uncertainty. There are more questions than answers: China's potential next moves, developments in Latin America or the dispute over Greenland and its impact on future relations between Europe and the United States.

In such circumstances, forecasting inevitably becomes less precise. But history shows that it is precisely in turbulent waters that new business models can be created and future success stories built.

Confusing times accelerate change

The concept of creative destruction, described by Austrian economist Joseph Schumpeter, is clearly visible right now. According to this theory, the economy evolves through constant renewal: new and more efficient technologies, business models and companies push out the old ones. Many of the world's largest private equity firms and industrial groups got their start or a new burst of momentum during times of crisis or market downturns, such as Blackstone, IBM or Samsung. This is no coincidence, but a natural part of the system.

One of the central shifts underway concerns the energy sector. The development of artificial intelligence is no longer just a matter of software or data centers — it is increasingly an energy issue. AI develops in clusters and for these to function reliably, they require a stable and manageable energy supply. This is why we are now seeing massive global investments in energy and a clear resurgence of nuclear power. These decisions will shape supply chains, geopolitics and the flow of capital in the years ahead.

At the same time, Europe is facing several challenges: sluggish economic growth, rising defense spending and the need to take greater responsibility for global security. In the long run, Europe's focus on sustainable economic development could prove to be a competitive advantage. More energy-efficient and resilient companies are better prepared for future crises.

From the perspective of Estonia and the Baltics, it's important to distinguish between media narratives and the actual situation. From a banking standpoint, the picture is far from hopeless. Household savings and investments are on the rise. Mortgage activity remained high last year. We're also seeing strong growth in business loans and the quality of these loans has remained very high. Nearly twice as many financing projects are underway now as there were a year ago. This points to a cautious but clear economic recovery.

Signs of recovery already there

Entrepreneurs' expectations are also shifting. Surveys show that the share of pessimists is declining and confidence in a return to growth is rising. The drop in the Euribor rate has begun to support companies' ability to invest — particularly in Estonia where both businesses and households carry relatively higher debt burdens than their southern neighbors. Still, a further decline in interest rates should not be expected in the near term, as market sentiment points in the opposite direction; a slow upward movement in rates is more likely.

In the short term, political and cyber risks dominate. In the long term, the biggest risks are tied to climate and the environment. That is precisely where the greatest business opportunities of the next decade lie. This will require capital, technology and the courage to make decisions.

What Estonia does not need right now is a day-to-day outlook smothered by pessimism. What we do need is more ambition and the courage to act. We need to believe that it's possible to grow capital here faster than elsewhere in the world. In a confusing world, one doesn't have to sit and wait for better times — they can be shaped.

Optimism does not mean denying risks. It means being ready to manage them. That mindset is exactly what separates the economies and companies that emerge stronger from crises from those that remain stuck, waiting for the clouds to clear.

--

Follow ERR News on Facebook and X and never miss an update!